SALGA alga has informed municipalities across the country that they are not entitled to increase electricity tariffs if they have not submitted cost of supply studies as required by the regulator.
The National Energy Regulator of SA (Nersa) approved tariff increases for 178 local government electricity distributors, but only 66 municipalities submitted their cost of supply studies.
According to Salga acting chief executive Lance Joel, municipalities that have not supported their applications for new electricity tariffs with a cost of supply study are not entitled to charge their end-user customers increased tariffs until such time that Nersa has granted them approval based on the studies.
”Municipalities are not entitled to charge their end-user customers the electricity tariffs approved as part of their 2024/25 financial budget if such tariffs have not been approved by Nersa based on cost of supply studies,” Joel stated in an urgent notice dated July 2, a day after the increases were implemented.
Municipalities without cost of supply studies have been forced to continue charging electricity tariffs based on the existing rates approved for the 2023/24 financial year.
Nersa has given the green light for municipalities to continue to implement the 12.72% tariff hikes.
Last month, civil rights organisation AfriForum was successful in its urgent North Gauteng High Court application to declare as unlawful, invalid and of no force and effect Nersa’s policy and process to approve municipal electricity tariffs.
According to Joel, no municipality shall be entitled to levy increased electricity tariffs upon end-user consumers until such time as Nersa has granted an approval of an application in accordance with the regulator’s notice to municipal licensed electricity distributors dated November 17, last year.
He added that any municipality for whom Nersa has not granted approval of an application for increased tariffs supported by a cost of supply study in accordance with the notice to municipal licensed electricity distributors shall be entitled to continue levying electricity tariffs on the same tariff as that applicable during the 2023/24 municipal financial year.
Joel explained that municipalities shall be permitted to supplement their applications for increased electricity tariff to Nersa with cost of supply studies for its consideration.
The high court granted municipalities 60 days from the date of the order to supplement their electricity tariff applications with cost of supply studies in accordance with Nersa’s notice to municipal licensed electricity distributors.
Salga indicated that it had received legal advice and made an assessment of the negative impact of the court order and that in its current form, it elected to file an application for leave to appeal and the regulator has also elected to challenge the order granted by the high court.
The association indicated that the effect of the filing of the applications for leave to appeal is that the implementation of the high court order is suspended pending the final determination of the application for leave to appeal and related appeal processes.
It also encouraged municipalities that have not conducted cost of supply studies to urgently commence the process irrespective of the possible suspension of the court order due to the appeal.
AfriForum has urged communities, businesses and civil institutions to fight against unreasonable electricity tariff increases and consider the content of their municipalities’ cost of supply studies to ensure that municipalities do not deceive or mislead consumers.