Court rules in favour of AfriForum in electricity tariff battle

Court rules in favour of AfriForum in electricity tariff battle

Durban — The Pretoria High Court has ruled that the National Energy Regulator of SA (Nersa) decision to consider municipalities’ applications for electricity tariff hikes without the required cost studies is “unlawful and invalid”.

AfriForum had filed its application in court in a bid to stop Nersa from considering the municipalities’ application to hike tariffs, and the order was granted on Friday.

In a statement, AfriForum said this meant Nersa may not consider applications for electricity tariff increases from municipalities unless the required cost studies were also submitted.

“As such, the court ordered that municipalities whose cost studies are absent will have to continue charging electricity tariffs based on the existing rates approved for the 2023/24 fiscal year. Municipalities’ applications for electricity tariff increases for the 2024/25 fiscal year can indeed be reconsidered by Nersa provided the necessary cost studies are submitted within 60 days from the date of the court order,” read the statement.

Manager of local government affairs at AfriForum Morné Mostert said that this was a great victory for the civil rights group.

“The court has now acknowledged that Nersa had failed to protect consumers against unlawful applications for electricity tariff increases – something the law compels the regulator to do,” he said.

Mostert said the increases in municipal electricity tariffs were supposed to be implemented on Monday. The increase would be for the 66 municipalities that submitted cost studies. There were 178 who had applied for increases.

On Friday, Nersa announced that it had met this deadline and that all 178 licensed electricity distributors’ tariff increase applications had already been considered and approved. However, only 66 of these municipalities had submitted cost studies.

“That announcement was made prematurely. We trust that Nersa will comply with the court order and that the applications of the municipalities whose required cost studies are absent will be scrapped,” said Mostert.

In June, AfriForum submitted an urgent application to the court to prevent Nersa from proceeding with these considerations as a high court order of October 2022 required that a cost study be submitted as part of the municipalities’ applications for tariff increases. This is also prescribed by the Electricity Regulation Act 4 of 2006.

According to Mostert, the use of a cost study for electricity tariff increases is critical because it gives a clear outline of what municipalities’ tariffs must be.

“The applications of municipalities that do not have cost studies are at this stage simply based on an estimate of what it costs to provide the service. However, applications for tariff increases must be made on accurately calculated figures that will ensure that fair tariff increases are passed on to consumers.”

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