AfriForum, a civil rights organization, has taken a decisive step by lodging an urgent application in the High Court in Pretoria against the National Energy Regulator of South Africa (NERSA). The application seeks to halt NERSA from considering municipal applications for electricity tariff increases slated for implementation on 1 July this year, in the absence of the necessary cost studies. This move is grounded in a High Court order from October 2022 and is aligned with the Electricity Regulation Act 4 of 2006, which mandates a comprehensive cost study as part of municipalities’ tariff increase applications.

Morné Mostert, Manager of Local Government Affairs at AfriForum, emphasizes the critical importance of utilizing cost studies in determining tariff increases. He highlights that cost studies provide a structured framework for establishing fair tariffs that sustain service delivery and uphold network maintenance standards. In contrast, tariff increase applications devoid of cost studies rely on estimations rather than precise calculations, potentially leading to arbitrary tariff adjustments that may burden consumers unfairly.

Historically, NERSA has used guidelines based on prior years’ tariffs and price bands to assess municipalities’ tariff increase applications. However, this approach was invalidated by the High Court order in October 2022, which mandated the exclusive use of cost studies for tariff determinations.

Despite the court order’s clear directive, AfriForum alleges that NERSA has continued to permit alternative mechanisms, such as a revenue requirement template, for tariff increase applications. This deviation from the prescribed process raises concerns about the regulator’s adherence to legal mandates and its potential impact on consumers.

Deidré Steffens, adviser on Local Government Affairs at AfriForum, stresses the significance of fairness and transparency in approving municipal electricity rates. She underscores that AfriForum’s legal action is driven by the imperative to safeguard consumers’ interests and ensure compliance with regulatory standards.

The absence of a response from NERSA following AfriForum’s inquiries regarding the submission of cost studies further underscores the urgency and gravity of the situation. AfriForum’s stance reflects a commitment to holding regulatory bodies and municipalities accountable, advocating for lawful processes that prioritize consumer welfare and regulatory compliance.

As Mostert concludes, “It is high time that NERSA and municipalities align with legislative requirements. Failure to do so not only undermines regulatory integrity but also poses significant challenges for consumers.” The outcome of AfriForum’s legal endeavor holds implications not just for municipal electricity tariffs but also for broader regulatory adherence and consumer protection in the energy sector.

-Afriforum

-The VIP Team