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A VICTORY for millions of municipal electricity consumers was achieved when the National Energy Regulator of South Africa (Nersa) lost its appeal bid against an earlier court ruling that it may not consider applications for electricity tariff increases from municipalities, unless the required cost studies are also submitted.
The Gauteng High Court, Pretoria, found in June that Nersa’s decision to consider municipalities’ applications for electricity tariff increases without the required cost studies is “unlawful and invalid”.
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 only be reconsidered by Nersa provided that the necessary cost studies are submitted within 60 days from the ruling.
Unhappy with the ruling, Nersa turned to the court for leave to appeal the judgment, but the application was turned down on Monday.
This has put an end to the energy regulator’s plans to push through “unlawful and invalid” municipal tariff hikes, said AfriForum, which launched the main application.
According to Morné Mostert, AfriForum’s manager of local government affairs, the submission of cost-of-supply studies is a required component of municipalities’ applications for tariff hikes as prescribed by the Electricity Regulation Act.
Cost-of-supply studies are critical because they provide a clear outline of what municipalities should charge for electricity to deliver the service and maintain the networks properly, he said.
However, municipal power tariff increases were implemented nationwide at 178 licensed electricity distributors on July 1, despite only 66 distributors having conducted cost-of-supply studies.
At least 112 municipalities have therefore been charging unlawful rates to millions of consumers for more than a month, Mostert said.
He explained that the ruling made by the court in June must now be implemented. Accordingly, all municipalities that have not submitted cost-of-supply studies must once again charge the electricity rates approved for the 2023/24 financial year.
Applications for tariff increases for 2024/25 will, according to the ruling, be reconsidered if the municipalities concerned submit the necessary cost-of-supply studies within 60 days.
AfriForum said it will meanwhile send an urgent letter to the energy regulator and demand a plan of action regarding the refund of over-recovery to consumers. The organisation will also request a complete list of municipalities that have not yet submitted cost-of-supply studies so that the implementation of the court order can be monitored.
“Nersa has now caused an administrative nightmare due to mismanagement because, although the error can be relatively easily rectified in favour of municipal account holders, it will be much more difficult to rectify the error for consumers of prepaid electricity,” Mostert pointed out.
He added that they realise that this judgment will have a significant impact on municipalities’ budgets. “But the line has now been drawn in the interests of consumers who have been milked as cash cows for years by inept municipalities,” Mostert said.
AfriForum is meanwhile investigating ways in which consumers can be assisted in the dispute process and will soon announce the way forward.