No 17% Eskom hike – for now
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.”