Court nixes Eskom’s urgent application for 17% price hike

South Africans can breathe a sigh of relief, after the North Gauteng High Court in Pretoria this morning dismissed Eskom’s urgent application to hike the price of electricity by almost 17% from April.

For now at least. Energy expert Ted Blom says while the battle may be won, the war is far from over.

“All it means is a temporary respite,” Blom said. “It’s still dire straits. I wouldn’t call it good news. Eskom is not going to stop”.

Last year, the National Energy Regulator of South Africa (Nersa) effectively refused Eskom’s proposed tariff increases – of around 15% – for each of the 2019-2021, 2020-2021 and 2021-2022 financial years. The regulator found these increases would have made electricity unaffordable in the long term and instead approved increase of only between 5.22% and 9.41%.

Eskom has since approached the court, in the hope of having a judge review and set aside Nersa’s decision and remit it back to the regulator for reconsideration.

In the meantime, though, the power utility’s lawyers last month argued for urgent interim relief allowing for an effective 16.6% increase from 1 April 2020.

But in his ruling, which was handed down on Monday, Judge Jody Kollapen found the matter was not urgent and that Eskom would not suffer any immediate and irreparable harm by being made to follow due process and wait for a ruling on their review application.

Judge Kollapen also emphasised that it was for the regulator – and not the court – to set electricity tariffs and that Nersa was a specialist body and, as such, was best positioned to make such a determination.

The chief executive of the Organisation Undoing Tax Abuse (Outa), Wayne Duvenage, agreed.

“This is Nersa’s domain and they’ve made their decision,” he said.

Duvenage said that Outa was pleased to see Nersa taking “a harder stance” with Eskom,

“And playing the role that it should have played in 2007 through to about 2015,” he added, “Nersa, at that time, was too soft in allowing Eskom to get the massive increases that they were asking for without asking them the tough questions”.

Duvenage said while Nersa was now doing “the right thing,” that it was “somewhat too little, too late”.

Eskom’s case, in part, is that a shortfall in revenue would likely result in “a national fiscal crisis”.

Eskom says if it were to default on any one of its debts, this could trigger defaults on many others and that with a significant portion of Eskom’s debt guaranteed by the state, this could, in turn, trigger defaults on massive state debts.

Duvenage, though, said Outa believed this was little more than “a fear-mongering tactic”.

“We know that the state is not going to allow Eskom to fail. They can’t allow it,” he said, “What the court is saying is: ‘Don’t make your problems the people’s problems’ … The state must find a solution, they must find the funds”.

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