Salga and Ameu insist on a public hearing before Eskom tariff corrections.
Municipalities countrywide are insisting they need more time to comment and that a public hearing must be held before energy regulator Nersa makes a decision to correct its own botched process last year in setting Eskom’s electricity tariffs.
The 21 January deadline for written submissions has already passed, but according to Charles Hlebela, Nersa head of communications, the regulator is considering a public meeting.
Nersa will however have to return to court to seek an extension of the strict timelines imposed by the High Court in Pretoria last year for finalising Eskom’s bulk tariffs for municipalities, which must feed into the municipal budget process.
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Flaws in the process
Nersa is currently caught up in two separate processes – both the result of court orders following findings that its decisions and processes were flawed.
The first court order, given in November last year, set timelines for Nersa’s determination of municipal tariffs, which take effect on 1 July every year. Among other things, it requires Nersa to inform municipalities on 31 January every year of the increase in Eskom’s bulk tariff for the upcoming financial year.
This is aimed at enabling municipalities to timeously prepare their budgets and applications to Nersa for their own tariffs for the following financial year.
The second court order, issued on 21 December, set aside Eskom’s revenue determination – the basis for calculating its tariffs – for the period 1 April 2025 to 31 March 2028. This was after Nersa conceded that it made mistakes, which Eskom valued at R107 billion and Nersa at R76 billion.
The court also set aside a secret settlement between Eskom and Nersa, in which they split the difference and decided among themselves that Eskom would be allowed to recover an additional R54 billion from consumers.
The court found that the settlement was unlawful because Nersa failed to consult electricity users, who would have had to foot the bill.
It ordered Nersa to follow an expedited consultation process, closing by 21 January, to fit it into the timelines for the municipal tariff process.
The process kicked off on 31 December and in its consultation paper, Nersa reverted to its initial assessment of the Eskom shortfall, namely R76 billion.
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Potential tariff hikes
This has led to wide reaction with speculation that it could result in an increase in electricity tariffs of more than 10% this year, instead of the 5.36% initially announced by Nersa.
The South African Local Government Association (Salga) and the Association of Municipal electricity Utilities (Ameu), on behalf of all municipalities, told Nersa in a letter:
“The requirement for our municipal membership to submit thorough and well-thought-[out] comment within such a condensed timeframe poses substantial challenges that could hinder the effective functioning of municipal services and the delivery of electricity to our communities – especially in the context of a whopping R76 billion Eskom revenue shortfall error by Nersa, which we believe will now have a significant impact on municipal tariffs going forward.”
Nersa’s Hlebela told Moneyweb that Salga’s request for a public hearing is only one among many and that if Nersa proceeds, it will be held within the next week or two.
Nhlanhla Ngidi, head of electricity and energy at Salga, said the 21 January deadline for written submissions is “unreasonable and practically impossible” for municipalities, where meetings and approvals must precede such submissions.
It is not clear whether Nersa will consider reopening the window for written submissions.
Salga has proposed that the deadline be moved to 15 February, together with a full-day public hearing on a virtual platform “so that non-member municipalities can be exposed to comments, questions, concerns, and so forth, from the public in an interactive and transparent manner”.
Salga’s Ngidi said it may be necessary for Eskom to return to court to seek a relaxation of the deadlines, because this is not in the interests of electricity users.
“With respect, the high court may be unaware of the processes and challenges that municipal electricity distributors must comply with and overcome when increases in electricity tariffs and their impact are considered,” he said.
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Hill-Lewis calls for transparency
According to Cape Town Mayor Geordin Hill-Lewis, the deadlines imposed by the court on Nersa for the approval of municipal tariffs have put an end to “Nersa’s delinquent handling of municipal tariff applications and the common practice of late decisions, without reasons, after the municipal financial year has already begun”.
He said this had previously “made a mockery of complex budget calculations and public participation processes, which are all completed by the time Nersa’s decisions have arrived in the past”.
Hill-Lewis added that Nersa will now have to inform municipalities of decisions timeously and publish the reasons immediately.
“This is a positive step for residents in all municipalities across South Africa, who will benefit from greater transparency in decisions on electricity tariffs.”
If Nersa does return to court to seek a relaxation of the deadlines, it will introduce new uncertainty into the municipal tariff process.
This article was republished from Moneyweb. Read the original here.
