Tshwane electricity tariff fight heads to court

The City of Tshwane and national energy regulator Nersa were served with court paper by AfriForum in an effort to stop the city’s unlawful implementation of increased electricity tariffs.

Nersa refused to approve Tshwane’s tariffs for 2019/20 on Friday, after AfriForum and the Electricity Resellers’ Association of South Africa (Erasa) approached it regarding serious concerns about the impact of structural changes in the tariff on specific consumers.

The city nevertheless implemented the proposed tariffs in contravention of the Electricity Regulation Act. Mayoral committee member (MMC) for utility services Abel Tau maintains that the city council is the executive authority and since it approved the tariffs, the city can proceed with implementation.

According to Tau, the city’s proposed tariff increase is within the Nersa guideline of 13.07%.

AfriForum is now bringing an urgent application to the High Court in Pretoria to stop the charging of the set of tariffs. It will be asking for the court to order the city to revert to the tariffs Nersa approved for 2018/19, until the regulator has approved Tshwane’s current application.

Jaco Grobbelaar, AfriForum coordinator for the greater Pretoria region, says neither the city nor Nersa has responded to the letters of demand the organisation served on them and that AfriForum has no other choice than to litigate. It hopes to argue the application on Tuesday.

In the meantime, Nersa has published an advertisement for public hearings about the proposed tariffs that will take place on July 11. At this occasion, the city is expected to present its reasons for the structural changes.

Nersa is also looking into the actions it could take against Tshwane for the premature implementation of the tariffs, but has not yet decided on a course of action, according to a senior official.

Among the things that concerned Nersa regulator members when they first considered Tshwane’s application, was the fact that the city put a new fixed monthly charge for residential users on the table for public comment during its budget process. The approved budget and provincial gazette, however, reflected a fixed monthly charge of R200, while the application submitted to Nersa on July 10 asked for R120.

Tshwane MMC for finance Mare-Lize Fourie admitted to Moneyweb editor Ryk van Niekerk that increasing this charge from R56 was a mistake, and the city had no idea how it had happened.

ANC chairperson Kgosi Maepa said at a press briefing on Thursday that the Tshwane multi-party caucus was told it was “a typo”. The ANC called for Tshwane city manager Moeketsi Mosola.

At a council meeting on June 27, the proposed tariffs were amended to reflect the R56 charge. Another amendment was to reduce a fixed charge for rural and agricultural land from R650 to R210 per month.

The city seemingly missed the R200 for residential consumers supplied by electricity resellers and did not change that back to R56. It also did not address Erasa’s concern about the increase of up to 400% in bulk tariffs at which they buy electricity from the city.

This, Erasa says, would destroy the business case of the industry that facilitates electricity supply to about 150 000 households in Tshwane.

It is not clear whether the city will refund consumers who have been charged unlawful tariffs, should AfriForum’s application succeed.

It is also unclear how the city will get around provisions of the Municipal Finance Management Act (MFMA) that preclude municipalities from increasing tariffs except at the beginning of the financial year on July 1, should Nersa eventually approve the proposed tariffs.

The Tshwane Money Matters Caucus has in fact appealed to Gauteng MEC for Cooperative Governance, Traditional Affairs and Human Settlements Lebogang Maile to place the city under administration. The absence of Nersa approval means the city lacks a revenue raising mechanism for its approved budget.

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