Big consumers of electricity take Madibeng to court

Several big electricity users in the Madibeng municipal area have brought an application in the Pretoria High Court, alleging that Madibeng is unlawfully making huge profits on electricity sales and using it for other municipal services.

They are asking the court to review and set aside energy regulator Nersa’s approval of Madibeng’s tariffs for 2013/14, 2014/15 and all subsequent years, on the basis that Nersa’s decision was unconstitutional, unlawful, irrational and that Nersa acted beyond its mandate when taking the decision, Moneyweb reports.

Nersa and the Madibeng municipality are both opposing the application.

Nersa annually publishes a guideline for the percentage increase in municipal tariffs and each municipality has to apply for its own tariffs and is only allowed to charge the tariff Nersa approves.

The applicants argue that this practice does not comply with the Electricity Regulation Act (ERA), which provides for electricity tariffs to be cost-reflective. They argue that Nersa is in fact allowing the municipality to impose a surcharge without being authorised to do so. A municipal surcharge may only be imposed in compliance with the Municipal Fiscal Powers and Functions Act, which does not authorise Nersa to approve such surcharges.

The court is requested to set the decisions aside and remit them to Nersa.

In its response, Nersa said the decisions were not unlawful. The energy regulator says the applicants are misunderstanding the legal regime, and accuses them of taking the law into their own hands by underpaying the electricity bills for years after reaching an agreement to that effect with Madibeng. It says municipalities are allowed to redirect some of their electricity income to other services.

The applicants obtained an interdict earlier to prevent Madibeng from disconnecting their power supply pending the finalisation of this application.

Kormorant asked the municipality for comment but did not receive a response by the time of going to press.