Nersa admitted last year to having miscalculated the amount Eskom could recover, leaving it with a shortfall of about R76 billion.
The City of Cape Town has called on the National Energy Regulator (Nersa) to immediately cease plans that would allow Eskom to potentially double its tariff increase.
This comes after Nersa admitted last year to having miscalculated the amount Eskom could recover, leaving it with a shortfall of about R76 billion.
Court ruling
This follows a high court hearing on 14 January, where Judge Anthony Millar ordered the energy regulator Nersa to redetermine the electricity tariffs applied in 2024-25.
Nersa’s error would hit cash-strapped consumers through higher electricity prices, with tariffs potentially rising by 10%.
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Impact
The order may also have a huge impact on the budgets of the four municipalities, the City of Joburg, Ekurhuleni on the East Rand, Madibeng Municipality in Brits, and Msunduzi in Pietermaritzburg.
For consumers who must retrospectively pay more, it will be a double whammy, as they will pay twice for Nersa’s flawed decisions, once in relation to their municipal tariffs and again as a result of errors in setting Eskom’s tariffs.
Nersa is currently running a public participation process, and the public has until Wednesday to submit comments
Cape Town aggrieved
Cape Town Mayor Geordin Hill-Lewis said Nersa wants to allow an additional Eskom hike of up to 100% – from the original 5-6% to 9-10.5% annually for the next two years.
Lewis says the potential 100% hike is based on incorrect Eskom figures and should be scrapped.
‘We call on Nersa to immediately cancel plans to permit up to a 100% additional increase for Eskom over the next two years. Nersa should instead complete a proper, error-free assessment of Eskom financials.
‘The fact is Eskom is in a better financial position than forecasted to Nersa, based on actual interim Eskom financial results, which show that Eskom has been able to generate substantial profits even under the lower originally approved tariffs,” Hill-Lewis said.
ALSO READ: Court orders Nersa to show municipal electricity costs
Consumers
Hill-Lewis said the public will feel the pinch.
“This is strong evidence that the public is being unfairly asked to absorb Eskom hikes of up to 10.5% annually for the next two years, which could end up being more than double the initially approved 5% to 6%.
“Cape Town’s call is clear: Nersa must immediately halt plans for this additional hike, and redo Eskom’s price application to ensure fairness and accuracy,’ said Hill-Lewis.
Submission
In his submission to Nersa, part of the court-ordered public participation, Hill-Lewis provided data indicating that Eskom’s financial situation appears more robust than initially presented.
“This includes Eskom’s improved financial performance, which the city points out can only rationally be explained by a combination of higher electricity sales and/or lower operational costs than what was forecasted to Nersa, requiring a full reassessment of the Multi-Year Price Determination.
The city’s Mayoral Committee Member for Energy, Alderman Xanthea Limberg, echoed Hill-Lewis’s sentiments, saying the discrepancies in Eskom’s tariff application were beyond just the calculation error.
“Eskom’s improved financial performance, which can be attributed to higher electricity sales and or reduced operational costs, necessitates a comprehensive reassessment of the Multi-Year Price Determination.”
Limberg said it is essential that Nersa scrutinises all data provided by Eskom to ensure accuracy and verify information, especially given the impact on the cost of living for residents.
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