Eskom given green light to hike tariffs in Nelson Mandela Bay Metro


File: Pay talks between the National Union of Metalworkers of SA (Numsa) and Eskom have reached a deadlock.

File: Pay talks between the National Union of Metalworkers of SA (Numsa) and Eskom have reached a deadlock.

JOHANNESBURG – Eskom has been given the green light to make future applications for electricity price adjustments against a number of private companies within the Nelson Mandela Bay Metropolitan Municipality in relation to the third multi-year price determination (MYPD3) methodology.

This comes after the Constitutional Court on Tuesday dismissed an application by Borbet SA and others for leave to appeal the decision of the Supreme Court of Appeal (SCA) which affirmed Nersa’s decision to allow Eskom’s application for a tariff adjustment.

The Constitutional Court dismissed Borbet’s application on the basis that the application “bears no prospects of success”.

Last month, the businesses approached the Constitutional Court in the case which dates back to 2013 for leave to appeal against the decision by the SCA to uphold electricity tariff increases approved by Nersa.

READ: Nersa wins court bid to hike tariffs

In February this year, the high court had ruled that Eskom’s regulatory clearing account (RCA) adjustments were “irrational, unfair and unlawful”.

Nersa limited the tariff increase to 2.2 percent. Nersa and Eskom then approached the SCA challenging the high court judgement, which then ruled in their favour.

In March last year, Nersa approved an additional 1.4 percent increase in the electricity tariff, over and above an earlier eight percent increase, that Eskom could impose on its customers in relation to the 2013/2014 financial year.

The SCA acknowledged that electricity tariff increases affect all South Africans, impacting the business world as well as domestic households.

Thus, there is a statutory framework to ensure fairness so that tariff increases allow electricity infrastructure to remain sustainable while at the same time ensuring that undue hardships are not imposed on consumers.

READ: Nersa studying court decision to set aside Eskom’s 9.4% tariff hike

Under the MYPD3, the tariffs set by Nersa that Eskom would charge and recover from its customers was an envisaged increase of eight percent year-on-year for each of the five years in question.

The additional 1.4 percent, an adjustment in relation to the 2013/2014 financial year, approved by Nersa, would mean that in the financial year 1 April 2016 until 31 March 2017 Eskom would have been entitled to a total increase of 9.4 percent which was passed on to end-consumers.

The implication of Tuesday’s Constitutional Court’s judgement is that the SCA judgement stands as the final decision in relation to the original application by Borbet to review the Nersa decision of 1 March 2016.

The Constitutional Court said the RCA tariff adjustment that was approved by Nersa for the first year (2013/14) of the MYPD3, which was effected through adjusting the tariff for the March 2016/17 financial year, remains applicable.

The ruling also clears the path for Nersa to process Eskom’s RCA submissions for the 2014/15, 2015/16 and 2016/17 financial years.