Pretoria - Municipalities around the country could feel the pinch of a court ruling setting aside the decision by the National Energy Regulator of South Africa (Nersa) to grant Eskom an effective 9.4% tariff increase for 2016.
On Wednesday, the high court ruled that the decision to approve the abnormally large hike was irrational, unfair and unlawful.The application had been brought by a group of businesses.
Both Eskom and Nersa said they were still studying the judgment and its implications.
Municipalities establish their electricity rates and tariffs based on increases in bulk purchase from Eskom, and the court ruling to review Eskom’s increase will automatically have a ripple effect on them.
The increase kicked in in April for Eskom’s direct customers, while municipal customers started paying more last month. The increase between 2014 and last year was just 3.4%. Eskom had applied to have a tariff hike so that it could recover R22.8 billion.
According to City of Tshwane spokesman Lindela Mashigo, the court ruling would have an impact as the metro’s base increase of 7.64% was based on that of Eskom.
“If it is reviewed, ours might also be reviewed,” said Mashigo.
He said the city would wait until the final outcome of the process and rework towards an adjustment budget, if there was a new tariff path. “Equally, Nersa is studying it with a view to challenge it in a higher court as this interferes with independent economic regulations,” said Mashigo.
Eskom has reminded its consumers that as it awaited a decision by Nersa on the way forward, it was important to note that the tariff would remain in force.
In the judgment, the judge said “I agree with the applicants that, even if the RCA (Regulatory Clearing Account) increase is set aside, the revenue approved for the 2016/17 tariff will remain in force, as well as the direct tariff to the customers and the tariff to municipalities”, Eskom stated.
The court did not give Nersa a revised figure, but had indicated that the power regulator must review its decision.
Meanwhile, the DA welcomed the ruling, saying it was step forward in bolstering economic growth and retaining jobs.
“High electricity prices are a burden to business and the average person in the street. It can act as a handbrake on job creation, stifling the economy, and will hurt individuals in their pocket and daily spending,” said the DA’s Gordon MacKay.
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