NERSA challenging Mandela Bay Business Chamber's victory against tariff increases

AUGUST 26, 2016

The National Energy Regulator of South Africa (Nersa) will appeal the North Gauteng High Court judgment in which the court set aside the regulator’s decision to grant Eskom a tariff increase.

“Nersa will be appealing the North Gauteng High Court judgment delivered on 16 August 2016 regarding Nersa’s earlier decision on the approval of Eskom’s Multi-Year Price Determination (MYPD 3) Regulatory Clearing Account (RCA) for the 2013/14 financial year,” said the regulator on Thursday.

The decision under review concerns Nersa’s approval of the RCA application for the tariff year 2013/14, which culminated in a 9.4% increase in the average tariff for standard customers for the 2016/17 financial year.

In August, the North Gauteng High Court ruled in favour of the Nelson Mandela Bay Business Chamber and four energy intensive companies based in the city of Port Elizabeth including Borbet SA, PG Group, Crown Chickens and Agni Steels SA, setting aside the regulator’s decision to grant the power utility a 9.4% tariff increase for the 2016/17 financial year.

In the application, which was heard in the North Gauteng High Court in June this year, the Chamber and the energy intensive companies asked for the R11.2 billion regulatory clearing account increase to the Eskom tariff to be declared unlawful and set aside based on numerous irregularities in the approval process.

The Chamber declared the victory as a victory for all electricty users in South Africa.

“Nersa is of the view that the judgment is 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.

“Therefore, Nersa will be appealing the judgment on the grounds of it being premised on erroneous information, a non-implementable position, as well as its substitution of Nersa’s decision of 2014,” said the regulator.

Nersa believes that the appeal will create certainty with regard to the regulatory framework as there will be an approved tariff in place during the appeal process.

“It will also allow an opportunity to clarify issues raised in the judgment. 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 judgement.”

Despite the Nelson Mandela Bay Business Chamber's celebrated victory, the 2016/17 tariff increases will remain in force, says the power utility.

–additional reporting