The National Energy Regulator of South Africa (Nersa) said it was finalising a court challenge brought by lobby group AfriForum which tried to prevent new electricity tariff increases.
The increases are due to be implemented on July 1 without any mandatory cost studies.
This is despite a 2022 high court order and the Electricity Regulation Act 4 of 2006 requiring cost studies for tariff increase applications.
In a statement, AfriForum manager of local government affairs Morné Mostert indicated that over the past 10 years, strict requirements called for municipalities to include cost-of-supply studies before increases were implemented.
“For the past 10 years, it has been the responsibility of municipalities to set up what they call, or the act calls, cost-of-supply studies, basically, a study that informs you of what the exact tariff is that the municipality can ask Nersa. This is because municipalities make a profit from selling electricity, so it’s very important for consumers to understand what tariff they charge you.”
AfriForum has accused the regulator of not complying with the court order.
Mostert said as such, municipalities were provided with a new revenue requirement template which they should use when applying for rate increases instead of the cost-of-supply study as the court ordered.
“The use of an approved template rather than the cost-of-supply study is a concern as it could mean that Nersa acts contrary to the court order. We are looking for verifiable figures to indicate what municipalities’ rates should be. A cost-of-supply study is the starting point to steer municipalities and Nersa in the right direction,” he said.
Nersa spokesperson Charles Hlebela said: “Nersa is not able to comment at this stage, it’s currently considering and finalising its court papers.”
Last month, in a statement, AfriForum requested that Nersa confirm whether it still obliges municipalities to submit cost-of-supply studies when they apply for tariff increases.
“The High Court in Pretoria declared the use of price bands and guidelines illegal in October 2022. This ruling means that municipalities must now submit cost-of-supply studies before they may introduce rate increases.
“The cost-of-supply framework was established to protect consumers from excessively high rates. Previously, Nersa annually passed on benchmarks and guidelines to municipalities, but the result of this was that municipalities did not review the actual cost of electricity supply. A cost-of-supply study determines what the current costs are for the supply of electricity, and a tariff increase can then be more accurately determined accordingly,“ it said.
Saturday Star
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