Electricity costs battle to hot up

Business Chamber will fight on after court ruling paves way for massive price hikes

Newly appointed Nelson Mandela Bay Business Chamber president Thomas Schaefer has vowed to continue the fight against unreasonable electricity tariff increases on behalf of business – which is facing a massive tariff hike next year.

This follows the Supreme Court of Appeal decision on Tuesday to uphold an appeal by the National Energy Regulator of South Africa (Nersa) and Eskom, setting aside a high court judgment which had originally set aside an interim tariff increase last year.

The ruling also means Eskom is no longer compelled to pay back a part of the 9.6% additional tariff increase Nersa approved last year.

In August, the Johannesburg High Court ruled that Nersa must review its decision to allow Eskom to increase prices from April 1.

This followed an outcry from Bay businesses that had asserted that Eskom needed to be more transparent about its expenses.

Nersa, which is tasked with setting Eskom’s electricity prices, gave Eskom permission to recoup expenses it did not budget for in its 2014 financial year by raising tariffs an average 9.4% from April 1 last year.

This was more than the 8% it had initially allowed.

However, a group of Bay companies, collectively known as the High Energy User Group, claimed the award was unlawful and Eskom should have provided more regular updates on its financial situation.

Eskom, which has seen its electricity prices nearly quadruple since 2007 when load-shedding first started, had to buy diesel to run emergency turbines to stave off power cuts in 2014 and 2015.

The utility is now proposing a 19.9% tariff increase which, if approved by Nersa, would be effective from April 1 next year.

Expressing deep concern over the Supreme Court ruling, the business chamber – whose members include many of the region’s energyintensive companies – confirmed the ruling reversed a high court judgment which had set aside an interim tariff increase last year.

“Ultimately, this will result in Eskom instituting major electricity price increases of up to 50% in 2018,” Schaefer said.

“Essentially, the Supreme Court is saying it is not able to support the public when there is a failure on the part of Nersa, the regulator, to discharge its duties or if there is an abuse on the part of Eskom in terms of its rights or privileges.

“It leaves the function entirely up to the regulator and government.

“This is unsustainable and will create even more hardship for consumers and the business sector struggling to survive in the recessionary environment created in part by irresponsible decisions by the government, which – among others – has led to South Africa being downgraded to junk status.

“High electricity costs add to the many disadvantages South African businesses face when competing globally due to the geographic location.

“This is also a key factor when potential investors evaluate countries to invest in.

“South Africa is fast becoming less and less of a desirable location for investment.”

He said the chamber would in all likelihood take the matter to the Constitutional Court.

Councillor Retief Odendaal, who heads the metro’s budget and treasury portfolio, said: “If business falls on hard times, we feel it. We are in a partnership. We will do everything in our capability to keep power supply costs down.

“We are worried about the potential tariff increases. Next year could be problematic.

“We will continue to look at costeffectiveness and cost-reflective tariffs in terms of power supply.

“We want to remain open for business. Excessive tariff increases could be punishing for domestic power users and small and medium businesses in particular,” he said.

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