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Eskom’s latest court bid re Nersa’s tariff increase decision

13 February 2020

Whilst many consumers around the country rejoiced at the recent news of Eskom’s failed bid relating to the implementation of electricity tariff hikes of 16.6% and 16.7% respectively, over the next two years, the unfortunate reality is that the dismissal by Judge Jody Kollapen of the High Court application related only to the request for the matter to be heard as urgent (Part A of the application).

The merits of Eskom’s case are still to be heard and determined when the matter comes before the Court through the normal court process. Part B of the application relates to a review of Nersa’s decision on the multi-year price determination (MYPD4).

The basis of Part A of the application was to enable the cash strapped SOE to implement the higher tariff increase before the beginning of its financial year in April 2020 instead of 8.1% for the 2020/21 financial year and 5.2% for 2021/22 financial year, as approved by Nersa.

Eskom’s basis for rejecting Nersa’s multi-year price determination is that it incorrectly regarded the R69 billion cash injection announced by Finance Minister Tito Mboweni in his 2019 Budget, as revenue. Eskom calls this an error and it appears that Judge Kollapen sees the merit in this – the learned Judge indicated on Monday that “Nersa violated the basic principle of accounting by treating an equity injection as revenue”.

The Court indicated that it would assist in the expedited hearing of Part B of the application – however any delay seriously impacts an already failing SOE which has crippling debt and is unable to attend to the critical maintenance needed at power stations across the country, which supports their current projection that load shedding is to continue for at least another 18 months.

However, looking to cash-strapped consumers in an already ailing economy with rampant job losses, to make up for huge revenue shortfalls cannot be the SOE’s only solution to its current debt crisis and we hope that the impending SONA brings a sustainable rehabilitative action plan without further burdens being placed on the ordinary consumer.

Author: Arvitha Singh, Candidate Attorney