Durban — Civil rights organisation AfriForum recently lodged an urgent application in the Gauteng High Court, Pretoria, against the National Energy Regulator of South Africa’s (Nersa) increased municipal electricity tariff hikes.
In terms of a high court order of October 2022, a cost study is required as part of municipalities’ applications for tariff increases. This is also prescribed by the Electricity Regulation Act.
AfriForum wanted to prevent the regulator from considering municipalities’ applications for electricity tariff increases – which must be implemented on July 1 this year – without the required cost studies.
Bluff Ratepayers & Residents Association (BRRA) vice-chairperson Allison Schoeman said the success of this application could have big implications for KwaZulu-Natal in six areas: consumer protection and fair pricing; municipal compliance and accountability; economic impact; service delivery improvement; legal and political ramifications; and community and ratepayer advocacy.
She said: “Consumer protection. If AfriForum’s application is successful, it would ensure that any electricity tariff increases in KZN are based on accurate, comprehensive cost studies. This would prevent arbitrary or inflated tariff hikes, offering fairer pricing to consumers.”
“Economic impact: fair, justified tariff increases could alleviate some financial burdens on households and businesses in KZN, potentially aiding in economic stability and growth. Conversely, arbitrary increases without cost studies could harm local economies by increasing operational costs for businesses and living expenses for residents.”
“Municipal compliance and accountability: enforcement of the high court order and the Electricity Regulation Act would hold KZN municipalities accountable, requiring them to provide detailed cost studies for any proposed tariff increases. This could lead to better financial transparency and governance within municipalities.”
It could aid with service delivery, she said.
“Ensuring that tariff increases are based on accurate cost studies might lead to better allocation of resources for maintaining and improving electricity networks. This could enhance the reliability and quality of electricity supply in KZN, addressing current service delivery challenges.
“Community and ratepayer advocacy: the success of AfriForum's application could empower other civil rights organisations and ratepayer associations in KZN to advocate more effectively for consumer rights and fair municipal practices.”
She said the implications for eThekwini ratepayers is that this development can be leveraged to strengthen arguments for transparency and fairness in municipal services in eThekwini as it provides a tangible example of how legal frameworks can be used to protect ratepayer interests.
Schoeman said that if successful, it could foster a more accountable, transparent, and consumer-focused approach to municipal electricity tariffs in KZN.
Manager of local government affairs at AfriForum, Morné Mostert, said: “Applications of municipalities that do not have cost studies are simply based on an estimate of what it costs to provide the service. However, applications for tariff increases must be made on accurately calculated figures that will ensure that fair tariff increases are passed on to consumers.”
Using a cost study for tariff increases is critical because it gives a clear outline of what municipalities’ tariffs must be to deliver the service properly and maintain networks, he said.
In April, AfriForum requested Nersa to confirm whether the regulator still obliges municipalities to submit cost studies as part of the tariff increase applications, but no feedback was received.
Adviser on local government affairs at AfriForum, Deidré Steffens, stressed that the application was made in the interests of consumers.
“Nersa’s current policy and process is seemingly not being carried out in accordance with the law and is therefore being applied to the detriment of consumers, and this is what we urgently need to stop.
“It is high time Nersa and municipalities get their houses in order. Nersa is supposed to regulate the electricity sector, but it seems as though their inability to comply with the legislation has an extremely negative impact on consumers.”
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