NERSA still silent on reasons for Eskom tariff hikes
Soundbite: Dalena Beyers (English)
Soundbite: Dalena Beyers (Afrikaans)
AfriForum, in a letter sent today to the National Energy Regulator of South Africa (NERSA), demands that the regulator disclose the full reasons for its revised decision on Eskom’s sixth multi-year tariff determination application (MYPD6) within five days. The civil rights organisation warns that the regulator’s silence on the reasons for its approval of Eskom’s revised tariff increases to secure more than R54 billion in additional revenue compromises transparency and accountability for credible and responsible energy regulation in the country.
NERSA already announced its decision on 8 February this year regarding the approval of an 8,76% tariff increase for the 2026/2027 financial year and an 8,83% increase for the 2027/2028 financial year but has still not released the full reasons for this decision.
According to Dalena Beyers, Advisor for Local Government Affairs at AfriForum, the revised decision was made after a limited public participation process was concluded in January. The High Court in Pretoria ruled in AfriForum’s favour in December and determined that the settlement between Eskom and NERSA, which was reached behind closed doors with the aim of correcting a calculation error following the initial tariff increases, took place without proper public participation. The public participation process that was concluded in January was therefore aimed at complying with the prerequisites of the National Energy Regulator Act and the Energy Regulation Act.
In his December ruling, Judge Jan Swanepoel argued, among other things, that “decisions made in secret and without public knowledge is anathema to the statutory framework, and our Constitutional norms.” He further argued that “the absence of any explanation as to how the compromise amount of R54 billion was arrived at leaves one with the uncomfortable feeling that the compromise was little more than a thumb-suck.”
“Despite NERSA’s promises after the announcement of the revised increases that full details of the reasons for the decision would be published, they have still not been released after almost two months. The regulator’s continued silence on the decision is a strong reminder of what Judge Swanepoel warned against in his ruling regarding the agreement that NERSA and Eskom entered into in secret,” Beyers explains. “This therefore raises serious questions about the transparency and rationality of the tariff determination process.”
Beyers further argues that AfriForum is concerned about NERSA’s overall handling of Eskom’s application and emphasises that regulatory decisions should not be treated as a series of isolated calculations. “Although December’s court case aimed to recalculate the Regulatory Asset Base component of the application, the hope was that a fair and responsible regulator would use this increase in costs to review the total calculation. Aspects such as the Weighted Average Cost of Capital (WACC), which has a multiplying effect on electricity prices, are dependent on both a calculation and an arbitrary decision by NERSA. Any downward adjustments would have saved the consumer a lot of money and have been applied by NERSA before. However, without reasons for NERSA’s decision, it is impossible to evaluate the rationality of this decision as well as Eskom’s new Retail Tariff Structural Adjustment.”
“Electricity prices have a direct impact on households, businesses and the broader economy. Therefore, decisions on Eskom’s allowable revenue should be fully motivated and traceable and made available without delay,” she concludes.
