The civil rights organisation AfriForum has brought an urgent application in the High Court in Pretoria against the National Energy Regulator of South Africa (NERSA).
According to this application, AfriForum wants to prevent the regulator from considering municipalities' applications for electricity tariff increases, which must be implemented on 1 July this year, without the required cost studies.
Under an October 2022 High Court order, a cost study is required as part of municipalities' applications for tariff increases. It is also prescribed by the Electricity Regulation Act 4 of 2006.
Nersa has approved a 12.72% increase in the price of wholesale electricity that Eskom sells to municipalities.
That increase was approved as part of Eskom’s multi-year price determination methodology application, which is a separate process from municipal tariff approvals.
"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," AfriForum's manager of local government affairs, Morné Mostert, said on Sunday.
The use of cost study was, however, critical, as it provides a clear outline of what tariffs need to be set at in order to maintain and service networks.
"The applications of municipalities that do not have cost studies are simply based on an estimate of what it costs to provide the service. However, applications for tariff increases must be made on accurately calculated figures that will ensure that fair tariff increases are passed on to consumers," he said.
NERSA has in the past used tariff guidelines, based on previous years' electricity tariffs, as well as price bands for determining municipalities' tariff increases. However, it was prohibited by the Supreme Court order of October 2022.
AfriForum requested NERSA in April this year to confirm whether the regulator indeed still obliges municipalities to submit cost studies as part of the tariff increase applications.
It said that no feedback has been received on this from the body.
Deidré Steffens, Advisor on Local Government Affairs at AfriForum, said that the civil rights organisation's application is done in the interest of consumers. She said that NERSA's current policy and process are not done in accordance with the law and are therefore applied to the detriment of consumers.
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