Ratepayers vow to oppose price hikes as Msunduzi Municipality forced to relook at electricity tariffs

Electricity consumers in Msunduzi have warned they will resist any increase in electricity tariffs after the city was ordered by the Gauteng High Court to resubmit its application along with a cost of supply study justifying the proposed tariff hikes.

The cost of supply refers to the study detailing how the municipality arrived at the tariffs. The judgment, handed down by the Gauteng High Court recently and striking down the tariff for the 2024-2025 financial year, has drawn mixed responses. The order has raised concerns that it might lead to the tariffs being adjusted upwards.

Last year, the municipality implemented a 13.32% increase from July 1, 2024, after Nersa (National Energy Regulator of SA) rejected its proposed 15.5% hike. The judgment follows an application brought by the Pietermaritzburg and Midlands Chamber of Business against Nersa and the Msunduzi Municipality.

The court documents show that there were two other applicants challenging Nersa and two other Gauteng municipalities over the same issue. The court ruled that Nersa’s decision to approve electricity tariffs for the Msunduzi municipality and the other Gauteng municipalities named in the court action is declared unlawful and set aside.

The municipalities listed as respondents are required by the court to resubmit their electricity tariff applications to Nersa, accompanied by their respective cost of supply studies for the 2024-2025 municipal electricity tariff, within 10 days. Nersa is ordered to publish the new applications, including the cost of supply studies.

“The applicants shall, over a period of 20 days, be allowed to make written submissions to Nersa in respect of such applications,” it said. Electricity consumers in Msunduzi are concerned the decision could lead to the tariffs being adjusted, raising fears that they may be expected to pay more.

Anthony Waldhausen of MARRC (Msunduzi Association of Residents, Ratepayers and Civics) expressed their concerns.

“MARRC is disillusioned by the High Court judgment, as the Msunduzi municipality now needs to submit a new cost of supply study for electricity tariff increases to Nersa. This could mean that the tariffs may double, forcing residents to cough up extra money to cover the incompetence at Nersa and Eskom. “Currently, residents are facing significant financial hardships and struggling to put food on the table. Eskom is perceived as anti-poor! “We cannot accept these high tariffs, and we need to wait for what the municipality comes up with in their cost of supply study. MARRC will oppose these high electricity tariffs!”

Melanie Veness of the Pietermaritzburg and Midlands Chamber of Business said the action was taken because the process followed to introduce new tariffs had been non-compliant, as the municipality had refused to produce the cost of supply study.

“By law, municipalities are only permitted to recover their efficiently incurred costs of supply and a small return on assets. “When the 2024/2025 electricity tariffs were proposed, Msunduzi proposed the increase. When they ‘consulted’ with us (as is legislatively required), they informed us that this was the outcome of their cost of supply study. We requested a copy of the cost of supply study so that we could engage meaningfully — Msunduzi refused to make it available, saying that it was confidential. We disagreed and objected, to no avail.

“Nersa is also required to consult with the public before determining a tariff, so we requested a copy of Msunduzi’s cost of supply study from them — they too refused to make it available and asked us to submit a PAIA application, which we did, but to no avail, because they still failed to furnish us with the cost of supply study.

“Having established that the process was flawed and the study questionable, we applied to have the tariff declared unlawful and set aside. Once redetermined, the tariffs are to be adjusted.”

She said, “Because there is a risk that certain customer categories (domestic), who have been enjoying relief at the industry’s expense, might find that they have been undercharged for electricity (although given the disparity between Eskom and Msunduzi’s tariffs, that seems unlikely), we specifically asked for relief to be limited to our members; however, the Regulator insisted that all tariffs be adjusted by them.

“It is therefore critical that all sectors of the economy engage in the consultation process that will unfold to ensure fair and cost-reflective tariffs in every customer category,” she said.

The municipality said it is aware of reports regarding the judgment but has not yet received the official court order.

“Once the judgment is received, it will be studied and considered, and the municipality will comment at the appropriate time.” Nersa said it will issue a statement today.

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