A power struggle of national significance
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,”