No 17% Eskom hike – for now

The Citizen (KZN) - - News - Ber­nade e Wicks

South Africans can breathe a sigh of re­lief af­ter the High Court in Pre­to­ria yes­ter­day dis­missed Eskom’s ur­gent ap­pli­ca­tion to hike the price of elec­tric­ity by al­most 17% from April. For now at least.

En­ergy ex­pert Ted Blom said that while the bat­tle might be won, the war was far from over.

“All it means is tem­po­rary respite,” Blom said yes­ter­day. “I wouldn’t call it good news. Eskom is not go­ing to stop.”

Last year, the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) ef­fec­tively re­fused Eskom’s pro­posed tar­iff in­creases of about 15% for each of the 2019-2021, 2020-2021 and 2021-2022 fi­nan­cial years. The reg­u­la­tor found th­ese in­creases would have made elec­tric­ity un­af­ford­able in the long term and in­stead ap­proved in­creases of be­tween 5.22% and 9.41%.

Eskom has since ap­proached the court in the hope of hav­ing a judge re­view and set aside Nersa’s de­ci­sion and send it back to the reg­u­la­tor for re­con­sid­er­a­tion.

In the mean­time, though, the power util­ity’s lawyers last month ar­gued for ur­gent in­terim re­lief al­low­ing for an ef­fec­tive 16.6% in­crease from 1 April this year. But in his rul­ing handed down yes­ter­day, Judge Jody Kol­lapen found the mat­ter was not ur­gent and Eskom that would not suf­fer any im­me­di­ate and ir­repara­ble harm by be­ing made to fol­low due process and wait for a rul­ing on their re­view ap­pli­ca­tion.

Judge Kol­lapen also em­pha­sised that the reg­u­la­tor – and not the court – set elec­tric­ity tar­iffs and that Nersa was a spe­cial­ist body and was best po­si­tioned to make such a de­ter­mi­na­tion.

Chief ex­ec­u­tive of the Or­gan­i­sa­tion Un­do­ing Tax Abuse (Outa) Wayne Du­ve­nage agreed. “This is Nersa’s do­main and they’ve made their de­ci­sion,” he said.

Outa was pleased to see Nersa tak­ing “a harder stance” with Eskom, but he said while Nersa was now do­ing “the right thing” it was “some­what too lit­tle too late”.

Eskom’s case, in part, was that a rev­enue short­fall would likely re­sult in “a na­tional fis­cal cri­sis”. Eskom said if it were to de­fault on any of its debts, this could trig­ger de­faults on many oth­ers and that with a sig­nif­i­cant por­tion of Eskom’s debt guar­an­teed by the state, this could trig­ger de­faults on mas­sive state debts.

But Du­ve­nage said this was “fear-mon­ger­ing”.

“We know the state is not go­ing to al­low Eskom to fail. They can’t al­low it. What the court is say­ing is: ‘Don’t make your prob­lems the peo­ple’s prob­lems’ … The state must find a solution.”

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