The Gauteng High Court, Pretoria has ruled on Friday that the National Energy Regulator of South Africa’s (Nersa) approval for the implementation of municipal electricity tariff hikes, without the use of proper cost studies and public participation processes, is unconstitutional.

Judge Etienne Labuschagne slammed Nersa on its argument that customers do not have the right to know what it costs municipalities to supply them with electricity. He remarked that “how the regulator could unilaterally declare a cost of supply study as confidential is beyond concerning”.

The judgment followed an urgent application by AfriForum in which it disputed the process Nersa followed to determine all municipal tariffs for this financial year, ending June next year.

Judge Labuschagne declared the electricity tariff approval process invalid for breaching constitutional and statutory obligations. He granted AfriForum’s request for an interdict for specified timelines for future public participation processes. The new timelines in the municipal electricity increase process will ensure that the public has time to participate.

According to the court ruling, the energy regulator must announce Eskom’s latest tariffs at which municipalities must purchase power by 31 January 2026. The final decision regarding tariff applications must also be submitted to Nersa by March 2026 to allow sufficient time for proper public participation.

The judge issued a rule nisi (provisional order) with a return date of 18 November, requesting all interested parties, including all 158 municipalities, to submit reasons, if any, why these proposed timelines should not be approved.

AfriForum hailed this as a victory for every person who pays for electricity. This ruling ensures that Nersa follows a process where consumers can have a proper and fair say in municipal electricity tariff increases and that Nersa and municipalities cannot pull the wool over consumer’s eyes, it said.

Judge Labuschagne, meanwhile, commented in his judgment that in certain instances there was no public participation at all before tariff increases were decided on. He mentioned the matter of Mogale City, whose application was published on 19 June this year. Nersa simply took a decision approving the tariff the next day.

Nersa argued that it is forced to deviate from the prescribed public participation processes due to circumstances forced upon it by tardy municipalities. But the judge said a municipality’s electricity tariffs are an essential component of its budget.

He added that as the electricity tariffs have to be approved by Nersa, such approval must be timeous and the information pertaining to it is to be provided within a timeframe that permits the municipality to adopt a budget before 1 July.

Regarding the position adopted by Nersa regarding the confidentiality of cost of supply studies, the judge said this is a topic on which the public has a right to be heard.

“The history of local government has demonstrated public anger and protest, sometimes violent, regarding poor service delivery in many parts of the country. There is understandable public interest, if not apprehension, about efficient use of public resources. When a municipality applies to Nersa for a tariff approval it must include a cost of supply study as the basis for its case for a reasonable return.

The cost of supply study is a public document intended for public and official scrutiny, Judge Labuschagne said.

Despite declaring the process invalid, the court declined to set aside the tariff approvals already granted for 2026. Instead, Nersa has to comply with the time frames set by the court going forward.

The City of Cape Town, meanwhile, said this is a positive step for residents in all municipalities across South Africa, who will benefit from more transparency in electricity tariff-setting decisions.

“The order also halts Nersa’s chaotic and delinquent handling of municipal tariff applications,” Cape Town Mayor Geordin Hill-Lewis said.

zelda.venter@inl.co.za

Source link