The High Court in Pretoria has censured the National Energy Regulator of South Africa for unilaterally deeming cost-of-supply studies confidential and restricting them to internal scrutiny, compelling the watchdog to release these documents alongside annual municipal tariff submissions. According to the judgment handed down on 31 October. This directive empowers consumers to scrutinise the precise expenses incurred by municipalities in delivering electricity, encompassing bulk purchases from Eskom and maintenance outlays, thereby assessing whether tariffs incorporate unwarranted excesses.
The ruling represents the regulator’s third judicial setback since 2022 concerning its methodology for establishing municipal electricity charges. Judge Etienne Labuschagne expressed profound disquiet over the regulator’s undisclosed policy of classifying these studies as private, which effectively obscured matters of direct public interest from view.
This development unfolds amid broader controversies, including two confidential accords the regulator struck with Eskom earlier this year, potentially burdening consumers with an additional R100 billion in electricity expenses. Lobby group AfriForum, which initiated the litigation, intends to contest one such agreement legally. As stated in AfriForum’s press release.
For over a decade, the regulator has faced criticism for issuing annual guidelines on permissible municipal increases without verifying if over-recovery occurred, amid allegations that municipalities exploit electricity profits to fund other services. A 2022 court decision invalidated this approach, mandating proper cost studies; yet approvals persisted without them the following year, prompting further legal action now under appeal.
In the current cycle, the regulator publicised tariff applications online for the first time, albeit excluding the studies, rendering public consultation superficial. For instance, Mogale City’s submission appeared on 19 June, with approval following the next day. The court also faulted the regulator for bypassing statutory requirements to advertise in the Government Gazette and newspapers in multiple languages, opting solely for digital platforms.
Compounding issues, tariff determinations often arrive post the 1 July fiscal commencement, hindering municipal budgeting. The court has now imposed strict timelines: notification of Eskom’s bulk rates by 31 January, municipal applications due by 31 March (with non-compliance risking zero uplift), public disclosure and consultation thereafter, and final approvals by 5 May.
These protocols, applicable nationwide including to Eskom, afford stakeholders until 18 November to respond before confirmation. Cape Town’s mayor, Geordin Hill-Lewis, hailed the order for curbing the regulator’s erratic processing, ensuring timely decisions and immediate rationale publication. As conveyed in the City of Cape Town’s official statement.
South Africa’s electricity tariffs have surged thirty per cent over five years, exacerbating affordability woes amid load-shedding and a twenty per cent energy poverty rate, according to the South African Local Government Association. With municipal distributors serving eighty per cent of households, this verdict bolsters accountability in a R500 billion sector, potentially curbing overcharges and fostering equitable pricing.