AfriForum manages to block Eskom-Nersa settlement over bigger tariff hikes (for now)

Civil rights organisation Afriforum has succeeded in delaying the implementation of the controversial agreement reached after a R54 billion miscalculation by the National Energy Regulator of SA (Nersa) in Eskom’s multi-year tariff price determination.

The settlement would cost the South African consumer around R54 billion in increased electricity price hikes over a three-year period.

It had been set to be ratified by a court order in the Pretoria High Court on 7 October.

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AfriForum filed an application to intervene in the case and Eskom eventually agreed to transfer the case from the uncontested, to the contested roll

'To say that the public, who must fund the decision, has no interest in the matter shows Eskom’s blatant arrogance and it can no longer be tolerated and blindly funded', said AfriForum adviser Deidré Steffens.

Stephen Grootes discusses the development with Matthew Cruise, energy expert at IMPOWER, and Professor Sampson Mamphweli, Head of the Energy Secretariat at the South African National Energy Development Institute (SANEDI).

Prof. Mamphweli draws attention to the lack of the required public participation in this particular case, because the power utility and the regulator reached an out-of-court settlement.

"Normally the public should be allowed to join in that particular application because this is a matter that involves them... and because this was done without the public getting involved is why AfriForum managed to stop the implementation of the decision."

However, because the dispute centres on a technicality, he doesn't see the process being stopped as a whole, because of the merits of the case.

"Unless the public representatives make a compelling case against Eskom and Nersa, I don't see this not being implemented... and even if it's not implemented it will still come back to haunt us in the next multi-year price determination (MYPD) cycle, because Nersa's error is a data input error on depreciation and the regulatory asset base."

The bottom line is that Eskom needs the money, he says.

Focusing on what he sees as Nersa's historical record of inefficiency, IMPOWER's Matthew Cruise speculates that the regulator will lose a lot of its influence or be replaced as the energy sector is restructured going forward.

To listen to the full discussion with Stephen Grootes on 702's The Money Show, click on the audio link below: