Court interdict to halt 12.75% electricity tariff increase

The City of Mbombela (CoM) originally asked for a 31% increase, but has only been granted 12.75%.

This, according to Sibongile Makushe-Mazibuko, the mayor of the CoM, was the proposed increase for the cost of electricity supply that the municipality submitted to the National Energy Regulator of South Africa (Nersa) earlier this year.

As of Monday July 1, the residents of the CoM have been paying 12.75% more for electricity.

Major confusion has reigned since last Friday June 28, when it was made known that the North Gauteng High Court found that only 66 of the more than 170 municipalities in the country were allowed to implement the new higher tariff.

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The court thus interdicted numerous municipalities from increasing their electricity tariffs, including the CoM.

According to the court interdict, only three municipalities in Mpumalanga complied with the regulation, which states that any application for an electricity increase must be accompanied by a cost of supply (CoS) study.

These municipalities are eMalahleni Local Municipality (Witbank), Steve Tshwete Local Municipality (Middelburg) and Thaba Chweu Local Municipality (Lydenburg).

These studies must also be considered and approved by Nersa before permission for an increase can be granted.

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The court order came after AfriForum submitted an urgent application to prevent Nersa from granting permission to municipalities for the electricity tariff increase. AfriForum argued that municipalities’ applications for these increases, without submitting CoS studies, are unlawful and invalid.

A High Court order of October 2022 stipulated that a cost study be submitted with municipalities’ tariff increase applications.

To further regulate uncontrolled electricity increases, the need for CoS studies as part of these applications are also prescribed by the Electricity Regulation Act 4 of 2006.

“This means Nersa may not consider any applications for electricity tariff increases from municipalities unless the required cost studies are also submitted,” Morné Mostert, a local government affairs manager at AfriForum, told Lowvelder on Monday.

The court has given municipalities that have not submitted CoS studies 60 days to hand in compliant applications. It further ordered Nersa to consider these applications within 30 days.

Makushe-Mazibuko said the CoM received a letter from Nersa last week that granted them permission to increase its electricity tariffs by 12.75%.

“I was, however, not happy with the letter that was emailed to us because it had not been signed. I requested our administration to first get a properly signed document before we go ahead with the implementation of the increase,” she said.

According to her, the CoM will subsidise the shortfall of income from consumers.

She said Nersa also instructed some municipalities to submit implementation plans to move towards cost reflectivity, which would probably mean a phasing in of higher increases over several years.

One of her biggest concerns is the low rate of payment for electricity in the outer areas of the CoM, such as KaBokweni, Daantjie and Matsulu.

“The problem here is that electricity is supplied directly by Eskom and due to non-payment, consumers in places such as the City, Barberton and Hazyview must now subsidise non-paying areas. There is a desperate need for closer co-operation between the CoM, Eskom and the national and provincial government to resolve the matter.”

In the meantime, Nersa said over the weekend that it would apply for leave to appeal the High Court’s judgment, compelling it to only approve municipal tariff applications based on CoS studies.

It said the order would be devastating for municipalities that would be subjected to an increase of 12.7% in the tariffs from the same date, which they must pay Eskom for bulk electricity purchases.