The Nelson Mandela Bay Business Chamber says the North Gauteng High Court’s ruling to set aside the 9.4% tariff hike granted to Eskom under a Regulatory Clearing Account (RCA) application is a “massive win” for businesses and all electricity consumers.
The chamber on Friday said its argument that the National Energy Regulator of South Africa (Nersa) did not follow its own procedures, or complete its public hearings in the timeframes that it had set for itself, led to the court victory.
The chamber, along with energy intensive companies in the Nelson Mandela Bay metropole, was opposed to Nersa’s granting of a 9.4% tariff hike to Eskom to recoup expenses it had not budgeted for in 2014.
The tariff increase came into effect in April.
This week’s judgment means that the electricity tariff for the year starting on April 1, 2017, could potentially be restricted to about 3.5%, as opposed to the 8% approved.
This is expected to have a knock-on effect on the increase in municipal electricity tariffs due to take effect on July 1, 2017.
The High Court confirmed the applicants’ argument to be correct and declared the RCA approval to be "irrational, unfair and unlawful".
Nelson Mandela Bay Business Chamber deputy president and electricity task team lead MC Botha told Engineering News Online during a telephone interview on Friday that Nersa had also failed to apply efficiency tests in its decision.
The chamber in June asked that the R11.2-billion increase that Eskom had been permitted to take into account in its tariff hike decision, following Nersa's RCA determination, be declared unlawful and set aside based on numerous irregularities in the approval process.
“Nersa argued that its multiyear price determination (MYPD) process was just a guideline, that it was not binding and that it could deviate. However, if a policy is adopted the public should be able to rely on it,” Botha stated.
He noted that about 35 companies used about 50% of the country’s electricity and that these companies should now collectively add about R6.6-billion to their bottom lines, while conservative estimates of the national savings to consumers were estimated at between R40-billion and R60-billion if the decision was implemented over the remainder of the third MYPD period.