As Newcastillians face the challenge of adjusting to the rising cost of living, AfriForum has reported a major victory for municipal electricity consumers following a significant ruling in the Gauteng High Court on Thursday, 23 August 2024.
The civil rights organisation announced that this victory prevents the National Energy Regulator of South Africa (NERSA) from imposing unlawful and invalid municipal tariff hikes.
The court’s decision came after NERSA’s application for its leave to appeal was dismissed.
AfriForum explained that this latest development follows an earlier High Court ruling from June 2024, which had determined that NERSA’s decision to consider municipalities’ applications for tariff increases without the necessary cost-of-supply studies was both unlawful and invalid.
Morné Mostert, AfriForum’s Manager of Local Government Affairs, explained that the submission of cost-of-supply studies is a mandatory requirement for municipalities seeking to increase tariffs. This requirement is set out in the Electricity Regulation Act 4 of 2006. Cost-of-supply studies are critical because they provide a clear outline of the charges municipalities should impose for electricity in order to deliver the service effectively and maintain their networks properly.
“We realise that this judgment will have a significant impact on municipalities’ budgets, but the line has now been drawn in the interest of consumers who have been milked as cash cows for years by inept municipalities,” said Mostert.
Despite this ruling, municipal power tariff increases were enforced nationwide on 1 July 2024 by 178 licensed electricity distributors, although only 66 of these distributors had conducted the required cost-of-supply studies. As a result, at least 112 municipalities have been charging unlawful rates to millions of consumers for over a month.
It should be noted that out of the 66 distributors that conducted cost-of-supply studies, only four municipalities from KwaZulu-Natal were listed. These were Newcastle Municipality, KwaDukuza Municipality, eThekwini Municipality, and City of uMhlathuze Municipality. This indicates that other neighbouring municipalities in KwaZulu-Natal, as well as many municipalities across the country, did not complete these essential studies.
According to AfriForum, Thursday’s judgement means that the High Court ruling from June must now be implemented. “Accordingly, all municipalities that have not submitted cost-of-supply studies must revert to charging the electricity rates approved for the 2023/2024 financial year. Applications for tariff increases for 2024/2025 will be reconsidered if the municipalities concerned submit the necessary cost-of-supply studies within 60 days,” said AfriForum.
In response to this situation, AfriForum stated that it would send an urgent letter to NERSA, demanding a plan of action for the refund of over-recovered amounts to consumers.
The organisation will also request a complete list of municipalities that have not yet submitted cost-of-supply studies to ensure that the court order is effectively enforced.
“NERSA has now caused an administrative nightmare due to mismanagement. While the error can be relatively easily rectified for municipal account holders, it will be much more difficult to correct the error for consumers of prepaid electricity. We understand that this judgement will have a significant impact on municipalities’ budgets, but the line has now been drawn in the interest of consumers who have been exploited for years by inefficient municipalities,” concluded Mostert.
Furthermore, NERSA has acknowledged the judgement and stated that it is currently studying it. “Once NERSA has thoroughly examined the judgement by the High Court, it will take a position on the matter, which will be communicated in due course,” said the energy regulator.
In the meantime, AfriForum has encouraged community members to send dispute letters to their municipal electricity providers in an attempt to reclaim their overpaid amounts. The organisation is offering to send a ready-made dispute letter to community members via email. To receive a dispute letter from AfriForum, click here.
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