112 municipalities unlawfully increased electricity prices without following legally required process
PAY back the money.
That’s what 112 municipalities must do after most of them increased the price of electricity from July 1 without following the proper procedures.
And if that doesn’t happen, residents should lodge disputes against municipalities found to be non-compliant.
Civic society organisation Afriforum said the electricity price increases that consumers across the country were made to pay for almost two months was “irregular and invalid”.
“This means that municipalities must reimburse the consumers for the amount that was overcharged,” said Afriforum’s Morne Mostert.
He made the comments after the Gauteng High Court this week dismissed an application by the National Energy Regulator of South Africa (Nersa) and the South African Local Government Association (Salga) for leave to appeal against its previous judgment that Nersa’s decision to consider municipalities’ applications for electricity tariff increases without the required cost studies was unlawful and invalid.
eThekwini Municipality is one of only four municipalities in KwaZulu-Natal which is compliant. The others are Newcastle Local Municipality, KwaDukuza Local Municipality and uMhlathuze Local Municipality.
Afriforum previously said that although the figures had not been released, it’s believed that all 178 licensed electricity distributors’ tariff increase applications were approved, although only 66 of these municipalities submitted cost studies.
Mostert said the ruling was a victory for transparency and accountability within the electricity sector. He said without the cost studies, municipal licensees did not know what they were paying for when they bought electricity from municipalities.
“To get that transparency one needs to look at the legislative document that must be handed to Nersa that is specifically required. In the absence of that, no municipal consumer actually knows what they are paying for when they buy electricity. So we hope our court application will energise municipalities to actually go and do this cost study. Obviously, when they do it, they need to start with public participation processes to invite comments on the actual numbers, the figures that municipalities should give in the construction of this cost of supply document.”
Mostert said after the court dismissed the leave to appeal application they wrote a letter to Nersa asking what steps would be taken to ensure that municipalities complied.
“Nersa is the regulator, they must enforce the legislation. And given the context of what we have currently... they haven’t complied with those pieces of legislation for more than a decade.”
He said if there was no enforcement by Nersa then municipalities would not comply with this requirement.
“If you are the municipality and you have devious intentions it’s much better to keep your consumers in the dark on what they are actually paying for.
“It is very difficult to say if a tariff is irrational if there’s no mechanism or no way to have that actual data and to use it in some form of a legal argument,” said Mostert.
He said it was important for consumers to know they could use the dispute mechanism to ensure that the municipality can’t use any debt collection measures against them because it’s levied on the wrong account.
“We still have the mechanism of laying a dispute against the municipality in section 102 of the Municipal Systems Act, which basically protects you from any legal instrument used against you for not paying your account. That’s a mechanism for individuals to lodge against the municipality to be protected against any debt collection process that the municipality can use against a specific individual because the wrong tariff is being applied to their account.”
Nersa this week said that it had noted the outcome of the court proceedings.
“The ruling follows the filing of leave to appeal the High Court order in the Afriforum v Nersa and Others compelling Nersa to only consider municipal tariff applications based on cost of supply studies.”
Nersa said it would not comment immediately on the result.
“Once Nersa has thoroughly examined the judgment by the High Court, it will take a position on the matter, which will be communicated in due course,” it said.
Eskom spokesperson Daphne Mokwena said they couldn’t comment because the issue was between the municipalities and Nersa.
“Remember municipalities have their distribution licence as much as Eskom also has its licence to distribute to its customers.
“Eskom gives bulk supply to municipalities and what happens beyond that bulk supply, that is between the municipalities and their customers because they’ve got the licence to distribute in those areas.”
Kevin Mileham, the DA’s spokesperson on electricity and energy, said the court was very clear that Nersa had to follow its rules. These required that municipalities submit a cost study as part of their tariff proposals and where there hasn’t been a cost study, there can’t be tariff increases.
He said municipalities would probably have to credit their customers for any unlawful “overcharge”.
“The courts have held in the past that municipalities can consolidate accounts. In other words, they are entitled to apply a charge or a credit to any account held by a customer. So if they have to credit customers who are prepaid, they could credit it to their rates account, or their water or sewage account, etc. However, where tenants are buying prepaid electricity, there may well be an issue and they may have to provide them with electricity as a credit,” said Mileham.
South African National Civics Organisation (Sanco) spokesman Sizwe Cele said one way municipalities could compensate customers for illegally increasing the cost of electricity was to say they shouldn’t pay until they’ve recuperated all the money they’ve paid in the past.
“People have already paid which means the municipalities owe the citizens who have been paying. There should be a way of getting the municipalities and Eskom to account for that because it means people must have paid them in advance,” said Cele.