Nersa’s electricity sub-committee is expected to “consider different options” at a special meeting this week.
Is Nersa trying to bring methodology in through the back door?Energy regulator Nersa will have to go back to court and ask for an extension of the 12 months it was given to develop a new methodology for municipal tariff increases to lawfully approve them in time for implementation on 1 July 2024.
This, says Ratings Afrika analyst Leon Claassen, will leave local authorities, which already collectively owe Eskom more than R70 billion, in an even worse financial situation, with Eskom most probably seeing a further deterioration in municipal debtors.The current mess comes after the High Court in Pretoria ruled in October 2022 that the method Nersa has been using for more than a decade to determine municipal electricity tariffs was unlawful.
Municipal tariffs are mostly higher than those of Eskom, where it sells directly to the end user, and there was an expectation that a reset of the municipal tariffs to reflect efficient costs would lead to a tariff reduction.The business chambers of Nelson Mandela Bay and Pietermaritzburg brought the court application that set aside this methodology. However, these are not the only councils at loggerheads with Nersa about the matter.
“Nersa’s recommendation for 2023/24 would have resulted in the city’s energy service running a shortfall of more than R500 million, placing service delivery and the ending load-shedding programme at severe risk,” she said.In November, Nersa wrote to municipalities to inform them that it would not publish guidelines and tariff benchmarks this year, as it had done before. Instead, municipalities must base their applications on cost studies.
This could be seen as contempt of court, says Morné Mostert, manager of municipal matters at AfriForum. The court specifically stated that it was not allowed to use the guideline and benchmark methodology from 2024/25 and that doing so would put it in contempt of court.‘Somebody must be held to account’
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