Nersa under fire for trying to hike power prices more, without public participation

The national energy regulator has come under fire after it announced that it would not hold public hearings on the proposed municipal electricity tariff increase.

Nersa is proposing a 7.47% increase in municipal tariffs from 1 July 2022.

But it’s using a controversial historic method of tariff setting, which involves providing a guideline to municipalities of the percentage increase to be implemented compared to existing tariffs.

There are also tariff benchmarks for different customer categories.

But the historic method of tariff setting is expected to be a tough sell for the energy regulator, because of two legal challenges to this methodology.

In the first case, several intensive energy users in the North West municipality of Madibeng challenged the municipality and Nersa over alleged unlawful profits on electricity sales.

The intensive energy users also accused Madibeng of using these alleged profits to cross-subsidise other municipal services.

They want the court to declare Madibeng’s tariffs for 2013/14, 2014/15 and all subsequent years unconstitutional, unlawful and irrational, on the basis that Nersa acted beyond its mandate (ultra vires) when taking the decision.

The second legal challenge arises from the Nelson Mandela Bay Business Chamber (NMBBC) and the Pietermaritzburg and Midlands Chamber of Business (PMCB). These municipalities are challenging Nersa’s use of the historic tariff setting method.

The Madibeng case has been postponed indefinitely, while no court date has been set for the PMCB and NMBBC case.

Nersa is asking that stakeholders submit written comments by 22 April 2022.

The energy regulator is optimistic that it would finalise the guideline and benchmarks by 11 May 2022. But said that due to time pressure, there will be no public hearings on the matter.

The DA said it will be writing to Nersa requesting it honours obligations in terms of the Nersa Act, and allow South Africans to share their views on the proposed municipal tariff increase. 

“Should Nersa fail to honour this request, any action taken to implement this tariff increase will be illegal and open to legal contestation,” said the party’s Kevin Mileham.

The party said that in making this decision, Nersa has violated section 10(1) (d) of the Nersa Act which states that:

• Every decision of the energy regulator must be in writing and be taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence to the energy regulator.

“Consumers are already struggling to keep the lights on at current electricity prices cost levels, yet Nersa thinks it is not important to canvass their views on another tariff increase,” said Mileham

“Due to the limited ability of municipalities to absorb costs and cushion consumers against electricity tariff increases, the costs will be passed on to the consumer,” Mileham concluded. 

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