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Municipalities that failed to submit cost reports cannot hike electricity prices – court

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The high court issued an order interdicting or preventing municipal electricity distributors from increasing their power prices come July 1, 2024. This was after an urgent application was filed by AfriForum to prevent the National Energy Regulator of South Africa (Nersa) from considering municipalities’ electricity tariff increase applications.

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THE GAUTENG High Court issued an order interdicting or preventing municipal electricity distributors from increasing their electricity prices come July 1, 2024.

This was after an urgent application was filed by AfriForum to prevent the National Energy Regulator of South Africa (Nersa) from considering municipalities’ electricity tariff increase applications.

ALSO READ: AfriForum hails ‘victory’ in court case to halt electricity price hikes

The court noted that distributors could not up their prices as they failed to submit a Cost of Supply study to Nersa.

The high court found that Nersa’s decision to consider municipalities’ applications for electricity tariff increases without the required cost studies is unlawful and invalid.

Essentially, this means that the regulator may not consider any applications for electricity tariff increases from municipalities unless the required cost studies are also submitted.

The court ordered that municipalities whose cost studies are absent, will have to continue charging electricity tariffs based on the existing rates approved for the 2023/24 fiscal year.

Municipalities’ applications for electricity tariff increases for the 2024/25 fiscal year can be reconsidered by Nersa but a cost study must be submitted within 60 days of the June 28 date (when the judgment was handed down).

Morné Mostert, a manager of local government affairs at AfriForum, said that this was a major victory for civil rights.

“This is a great victory for civil rights. The court has now acknowledged anew that Nersa failed to protect consumers against unlawful applications for electricity tariff increases, something the law compels the regulator to do,” Mostert said.

The use of a cost study for electricity tariff increases is critical, according to Mostert, as it gives a clear outline of what municipalities’ tariffs must be to deliver the service properly and maintain networks.

“The applications of municipalities that do not have cost studies are at this stage simply based on an estimate of what it costs to provide the service. However, applications for tariff increases must be made on accurately calculated figures that will ensure that fair tariff increases are passed on to consumers,” Mostert added.

Below is a list of the 66 municipalities that did submit a Cost of Supply study report:

1. Oudtshoorn Local Municipality

2. eThekwini Metropolitan Municipality

3. Swartland Local Municipality

4. Overstrand Local Municipality

5. Drankenstein Local Municipality

6. Bergrivier Local Municipality

7. Saldhana Bay Local Municipality

8. Sakhisizwe Local Municipality

9. George Local Municipality

10. Langeberg Local Municipality

11. Hessequa Local Municipality

12. City of uMhlathuze Local Municipality

13. Newcastle Local Municipality

14. Midvaal Local Municipality

15. Dr Beyers Naude Local Municipality

16. Buffalo City Metropolitan Municipality

17. Nkentoana Local Municipality

18. Tswaing Local Municipality

19. Khai Ma Local Municipality

20. Mohokare Local Municipality

21. Rustenburg Local Municipality

22. Umsobombu Local Municipality

23. Letsemeng Local Municipality

24. Emalahleni Local Municipality

25. Naledi Local Municipality

26. City of Tshwane Metropolitan Municipality

27. Senqu Local Municpality

28. Makana Local Municpality

29. Knysna Local Municipality

30. Steve Tshwete Local Municipality

31. City of Ekurhuleni Metropolitan Municipality

32. Cape Agulhas Local Municipality

33. Walter Sisulu Local Municipality

34. Tswelopele Local Municipality

35. City of Cape Town Metropolitan Municipality

36. Sundays River Local Municipality

37. Musina Local Municipality

38. Cederberg Local Municipality

39. Witzenberg Local Municipality

40. Ba-Phalaborwa Local Municipality

41. Cederberg Local Municipality

42. Ephraim Mogale Local Municipality.

43. Thaba Cheu Local Municipality.

44. Breede Valley Local Municipality

45. Setsoto Local Municipality

46. Theewaterskloof Local Municipality

47. Breede Valley Municipality

48. Swellendam Local Municipality

49. City of Matlosana Local Municipality

50. Moghana Local Municipality

51. Laingsburg Local Municipality

52. Tsantsabane Local Municipality

53. Twelopele Local Municipality

54. Lekwa-Teemane Local Municipality

55. Greater Tzaneen Local Municipality

56. KwaDukuza Local Municipality

57. Moghaka Local Municipality

58. Bela Bela Local Municipality

59. Mokgalakwena Local Municipality

60. Ndhlambe Local Municipality

61. Thembelihle Local Municipality

62. JB Marks Local Municipality

63. Stellenbosch Local Municipality

64. City Power Johannesburg.

65. Centlec (Soc) Ltd

66. Nelson Mandela Bay Municipality

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