The National Energy Regulator of South Africa (Nersa) confirmed on Thursday that it would appeal the August 16 North Gauteng High Court judgment setting aside its approval of Eskom’s third multiyear price determination (MYPD3) Regulatory Clearing Account (RCA) adjustment for the 2013/14 financial year.

Eskom submitted an application for revenue and cost variances of R22.8-billion for the financial year in question and was granted R11.2-billion on March 1, resulting in a 9.4% tariff increase on April 1. Had the RCA clawback application been rejected, the tariff would have increased by 3.5%.

A group of energy-intensive businesses, supported by the Nelson Mandela Bay Business Chamber, subsequently approached the court, claiming that Nersa and Eskom had failed to follow the prescribed MYPD methodology and that the outcome was, therefore, unlawful.

Judge Cynthia Pretorius concurred, finding the deviation from the MYPD methodology, as well as Nersa’s failure to communicate such deviation to stakeholders, to be “irrational, unfair and unlawful”.

Pretorius also found that Nersa did not discharge its statutory and regulatory mandate when it failed to properly address Eskom’s inefficiencies during the period and by allowing a pass-through adjustment relating to an agreement with Aggreko International Projects.

She, therefore, set aside the RCA decision and remitted it back to Nersa.

However, following a meeting of the Energy Regulator on August 25, Nersa said it was of the view that the judgment was “flawed”. “It has also created a hierarchy of issues in the application of the MYPD methodology without considering the objective of the methodology and how the RCA is decided,” the regulator said in a statement.

Nersa would, therefore, appeal on the grounds of the judgment being “premised on erroneous information, a non-implementable position, as well as its substitution of Nersa’s decision of 2014”.

The regulator argued that the appeal would create certainty with regard to the regulatory framework, as there would be an approved tariff in place during the appeal process”.

“The option to appeal is considered to be the most effective manner to remedy the situation created by the judgment while ensuring that regulatory certainty is sustained through the most available legal means without violating the contents of law and judgment.”