A power strug­gle of na­tional sig­nif­i­cance

Finweek English Edition - - INSIDE -

A po­ten­tially prece­dent-set­ting lit­i­ga­tion by a group of ma­jor Nel­son Man­dela Bay com­pan-ies over the high mark-up which the city charges for the power that it buys from Eskom has caught the at­ten­tion of other big power users around the coun­try.

It has been a fight sev­eral years in the mak­ing and late last year it cul­mi­nated in an ap­pli­ca­tion to the Pre­to­ria High Court by 13 ma­jor Nel­son Man­dela Bay com­pa­nies cit­ing the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) as the f irst re­spon­dent, and the Nel­son Man­dela Bay Mu­nic­i­pal­ity as the sec­ond re­spon­dent.

THEIR BEEF? That Nersa un­wit­tingly, and with­out con­sid­er­ing all the rel­e­vant in­for­ma­tion, ap­proves the sur­charge that mu­nic­i­pal­i­ties tack onto the bill for the elec­tric­ity sup­plied to com­pa­nies within city lim­its – in this case specif­i­cally, the Bay mu­nic­i­pal­ity. Al­low­ing mu­nic­i­pal­i­ties to im­pose a blan­ket hike across the board is, the com­pa­nies ar­gue, un­con­sti­tu­tional, as busi­nesses just out­side mu­nic­i­pal bound­aries get the same ser­vice for much less sim­ply be­cause they get their power straight from Eskom.

In the case of the Bay metro, com­pa­nies pay an av­er­age of 31% more than they would if they got their power straight from Eskom. Ac­cord­ing to fig­ures pub­lished by Na­tional Trea­sury, the city’s pro­jected rev­enue from the sale of elec­tric­ity of the three fi­nan­cial years span­ning from 2013/14 to 2015/16 is just un­der R10bn.

The lit­i­ga­tion has sig­nif­i­cance for other ma­jor cen­tres, too, as all mu­nic­i­pal­i­ties charge a mark-up on the power that they buy from Eskom. Al­though the price varies de­pend­ing on the elec­tric­ity con­sumer, Jo­han­nes­burg, Nel­son Man­dela Bay and Potchef­stroom charge some of the high­est mark-up rates coun­try­wide while Cape Town, Dur­ban and Tsh­wane are less harsh.

“The dif­fer­ence be­tween the charge to Eskom di­rect cus­tomers and Nel­son Man­dela Bay Mu­nic­i­pal­ity cus­tomers of ap­prox­i­mately 31.2% amounts to an un­law­ful sur­charge, which Nersa has no con­sti­tu­tional power to im­pose, or to au­tho­rise the mu­nic­i­pal­ity to im­pose,”

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