Municipal tariff hikes go to court

Civil rights organisation AfriForum has brought an urgent application in the High Court in Pretoria against the National Energy Regulator of South Africa (Nersa) as 1 July creeps closer.

AfriForum manager of local government Morné Mostert said AfriForum wants to prevent the regulator from considering municipalities’ applications for electricity tariff increases, which must be implemented on 1 July, without the required cost studies.

“Under a high court order of October 2022, a cost study is required as part of municipalities’ applications for tariff increases. This is also prescribed by the Electricity Regulation Act 4 of 2006.”

Nersa ‘disregarding order’

Mostert said the use of a cost study for tariff increases is critical because it gives a clear outline of what municipalities’ tariffs must be to deliver the service properly and maintain networks.

“The applications of municipalities that do not have cost studies are based on an estimate of cost to provide the service.

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“However, applications for tariff increases must be made on accurately calculated figures that will ensure fair tariff increases are passed on to consumers.”

Mostert said Nersa has in the past used guidelines based on previous years’ tariffs as well as price bands for determining tariff increases.

This was banned by the high court order of October 2022. But it appears Nersa is disregarding the order, Mostert said.

The regulator recently sent communications to municipalities in which the use of a revenue requirement template instead of the prescribed cost study was made available for tariff increase applications,” she said.

AfriForum requested Nersa in April to confirm whether the regulator still obliges municipalities to submit cost studies as part of the tariff increase applications.

“No feedback has been received on this from Nersa,” Mostert said.

‘We don’t have a choice’

AfriForum’s advisor on local government affairs Deidré Steffens said: “It appears Nersa’s current policy and process is not being carried out per the law and is therefore being applied to the detriment of consumers – and this is what we urgently need to stop.”

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Organisation Undoing Tax Abuse CEO Wayne Duvenage said Nersa was not doing its job to protect consumers.

Economist Dawie Roodt said the average person was past not being able to afford all the increases.

“Worse of all, we don’t have a choice because they are statutory monopolists,” he said.