NERSA Admits to a ‘Mistake’ in Applying the Law

Dear Editor

The DA is calling on the National Energy Regulator of South Africa (NERSA) to provide urgent clarity on its electricity tariff determination methodology following the regulator’s shocking admission that the ongoing electricity affordability crisis has been exacerbated by tariff hikes based on “a mistaken interpretation of the law.”

In a stunning admission, NERSA’s head of electricity regulation – Nhlanhla Gumede, conceded that they have been ‘…using an inappropriate pricing methodology which is not founded in the Electricity Regulation Act (ERA)’ but rather on the repealed 1987 Eskom Act. This critical oversight could potentially have had devastating consequences for consumers. Gumede further acknowledged that NERSA has failed to fulfill its mandate as outlined in the ERA, stating, “The objective of the ERA is to balance the interests of Eskom, consumers, and the supply industry. I don’t think we have done this.”

If NERSA does not address the confusion around its model, its approval of electricity hikes under flawed legal interpretations may potentially have robbed consumers of their hard-earned money, thereby rendering the existing electricity tariff determination model untenable. NERSA must ensure that its processes and decisions are legally compliant and can with stand public scrutiny. The recent court case around municipal tariffs highlights the need for consistency in the application of its own rules.

South Africans have been burdened with exorbitant electricity costs while enduring rolling blackouts and unreliable supply. Conservative estimates point out that between 2007 and 2022, Nersa-approved Eskom tariffs went up by 653% while inflation went up by 129%.

The severity of the impact of these outrageous electricity tariffs on consumers is best captured through the DA’s petition against high electricity tariffs, which has now surpassed 50,000 signatures. It is simply unacceptable that consumers have been shouldering this financial burden based potentially on NERSA’s legal missteps in applying the law and determining electricity tariffs.

The DA will bring our call for a review of electricity tariffs on the Parliament floor after the Speaker of the National Assembly, Thoko Didiza, granted our request for a Debate of Urgent Public Importance on the matter. This crucial debate is scheduled to take place on Tuesday 3 September 2024. We will continue to fight against unjustified tariff hikes and work towards a more transparent and consumer-focused regulatory environment.

Regards

Kevin Mileham MP
DA Spokesperson on Electricity and Energy