Court considering how to compensate electricity users who overpaid.
The case is about more than tariff errors – it’s about whether court orders can translate into meaningful financial relief for electricity users. Picture: iStock
Energy regulator Nersa has admitted in the High Court in Pretoria that the electricity tariffs it approved for three metropolitan municipalities and two local municipalities for the previous financial year were unlawful.
One of the reasons is that the numbers underpinning tariff applications by the Johannesburg, Ekurhuleni and Nelson Mandela Bay metros, as well as the Emfuleni and Madibeng municipalities, were riddled with errors.
Nersa nevertheless approved them without checking the figures.
After large electricity users highlighted the errors in court papers, the regulator had little choice but to concede that its approvals were “indefensible”.
The court is now considering a remedy that would compensate those who overpaid while preventing a “flood” of applications seeking to have Nersa’s tariff decisions set aside because of similar errors.
Nersa and the municipalities have previously failed to comply with several court orders in similar cases, leaving applicants who approached the courts for assistance without the relief they had sought.
Court seeks lasting solution
The court heard on 9 November that businesses in Nelson Mandela Bay had to pay 76% more for electricity in 2025/26 than it cost the metro to provide the service.
Judge RG Tolmay, who is hearing the latest applications this week, made it clear that she wants to issue an order that delivers actual relief, while preventing electricity users from having to return to court over incorrect tariffs.
“The lawyers make money and the taxpayers pay for it. Every few weeks there is another court application. The legal position is clear, but how does that help anyone?” she asked.
“This cannot go on indefinitely,” she said, raising the possibility of appointing an independent expert to determine the extent of the overcharging so that affected customers could be credited without delay.
She also raised the possibility of stricter court supervision to ensure that the eventual order is implemented.
Tolmay instructed the legal teams to consider possible solutions and submit proposals.
Previous orders ignored
Moneyweb previously reported that Judge Anthony Millar ruled in the same court about a year ago that the electricity tariffs Nersa had approved for 2024/25 in Johannesburg, Ekurhuleni, Madibeng and Msunduzi in Pietermaritzburg were unlawful.
In January, he referred the matter back to Nersa to correct its mistakes by redetermining the tariffs.
Nersa missed the 30 June deadline and, by November, had still not finalised the redetermination.
Under the court order, either the previous year’s tariffs or the equivalent Eskom tariff would apply if Nersa failed to meet the deadline. In both cases, this would provide relief to businesses whose tariffs, according to the applicants, had been unlawfully set too high.
According to Melanie Veness, CEO of the Pietermaritzburg and Midlands Chamber of Business, the Msunduzi Municipality must grant credits totalling about R200 million to nearly 700 businesses that were chamber members when the case was instituted.
However, this has yet to happen.
The court has now heard that several such cases have been brought before the courts over the past 10 years.
Madibeng, for example, last implemented a lawful tariff around 2013. In all these cases, Nersa and the municipalities concerned failed to comply with court orders, leaving prejudiced customers without meaningful relief despite having won their cases.
MC Botha, an attorney at Pieterse Sellner Erasmus TRM Tax Attorneys, represents the Casting, Forging and Machining Cluster of South Africa (CFMC), Autocast SA, Mpact and Coega Steels in the latest applications.
He indicated that he is already preparing similar court applications on behalf of some of his clients to challenge this year’s Nersa tariffs in several municipalities.
Dispute over refunds
Ekurhuleni, which has strongly opposed the applications challenging its tariffs, argued that it cannot afford to refund customers.
In response, Mpact, one of the parties challenging its electricity tariffs for 2025/26, proposed limiting any adjustments to the parties before the court.
Nersa argued, however, that this would be unfair to other consumers. It said any adjustments should apply to all electricity users in the municipalities concerned.
The regulator also argued that the court should allow it to phase in tariff corrections over future years, using adjustments similar to those applied to Eskom. This would help prevent sudden price shocks.
Advocate Michael Chaskelson, who represents several of the applicants, said that if crediting his clients takes time, provision should also be made for interest.
The hearing continues.
This article was republished from Moneyweb. Read the original here.
