- Business Chambers challenges tariff methodology
- It says it’s unlawful for Municipalities to determine retail tariffs
Business chambers in Nelson Mandela Bay Metro, Eastern Cape and Pietermaritzburg, KwaZulu-Natal, have filed a lawsuit against the National Energy Regulator of South Africa (NERSA), challenging the tariff methodology used in determining the applicable tariff for the state-owned electric utility, Eskom.
The chambers called the methodology “unlawful” as it allows Municipalities to determine and implement retail tariffs with a differential of as high as 60%. In a joint statement, the Business Chambers said, “The methodology is based on guidelines and benchmarking rather than on the cost of supply which is being stipulated in the legislation,”
“This methodology is thus an enabler for municipalities to implement excessive tariffs and then to utilise this to fund escalating electricity losses which are the result of their own inefficiencies, among which includes the lack of maintenance of infrastructure as well as rampant cable theft.” the statement read.
“This has resulted in tariff differentials between distributors in South Africa being as high as 60%, creating unacceptable regional distortions in electricity costs across the country,” the Chambers said.
The CEO of the Nelson Mandela Bay Business Chamber, Denise van Huysteen, speaking on the lawsuit, said unlawful municipal tariffs could lead to escalations from the current tariff levels.
“In such an environment, continued excessive mark-ups from Municipalities will exacerbate pressure on Municipal consumers and in particular on businesses who are dependent on electricity for the continuity of their operations,” Van Huysteen said.
“In such an environment, continued excessive mark-ups from Municipalities will exacerbate pressure on Municipal consumers and in particular on businesses who are dependent on electricity for the continuity of their operations,” she added.