The Gauteng High Court’s rejection of a leave to appeal application by the National Energy Regulator of South Africa (Nersa) related to proposed municipal tariff hikes, is a victory for municipal electricity consumers, civil rights organisation AfriForum says.

Earlier this year, the same court ruled in AfriForum’s favour, confirming that Nersa’s decision to consider municipalities’ applications for tariff hikes without the required cost-of-supply studies was unlawful.

AfriForum local government affairs manager Morné Mostert says the submission of cost-of-supply studies is a required component of municipalities’ applications for tariff hikes as prescribed by the Electricity Regulation Act. These studies provide a clear outline of what municipalities should charge for electricity to deliver services and maintain networks properly.

Nersa had approved 178 licensed electricity distributors’ applications on July 1, despite only 66 of these distributors having conducted cost-of-supply studies.

AfriForum says at least 112 municipalities have been charging unlawful rates to consumers for more than a month.

The rejection of the appeal means the ruling made in AfriForum’s favour in June must be implemented – all municipalities that have not submitted cost-of-supply studies must, once again, charge the electricity rates that were approved for the 2023/24 financial year.

Applications for tariff increases for 2024/25 will, according to the ruling, be reconsidered if the municipalities concerned submit the necessary cost-of-supply studies within 60 days.

In the meantime, AfriForum will send an urgent letter to Nersa and demand a plan of action regarding the refund of over-recovery to consumers.

The organisation will also request a complete list of municipalities that have not yet submitted cost-of-supply studies so that the implementation of the court order can be monitored.

“Although the error can be relatively easily rectified in favour of municipal account holders, it will be much more difficult to rectify the error for consumers of prepaid electricity,” Mostert says.

AfriForum acknowledges that this judgment will have a significant impact on municipalities’ budgets, but the line has now been drawn in the interest of consumers who have been milked as cash cows for years by inept municipalities, the organisation states.

AfriForum is investigating ways in which consumers can be assisted in the dispute process and will soon announce the way forward.