Civil rights organization AfriForum is pressing for South African consumers to be reimbursed after a court ruled that electricity tariffs imposed by certain municipalities were unlawful. The Gauteng High Court recently denied an appeal from the National Energy Regulator of South Africa (Nersa), upholding a previous decision that ruled against the regulator’s approval of municipal tariff hikes without the required cost-of-supply studies. This development is seen as a significant victory for electricity consumers across the country.
Earlier this year, the same court had ruled in favor of AfriForum, determining that Nersa’s decision to approve municipal applications for tariff hikes without these crucial studies violated the law. These cost-of-supply studies, mandated by the Electricity Regulation Act, are essential as they outline the justifiable costs for municipalities to deliver electricity services and maintain their networks. Without them, municipalities risk overcharging consumers without a clear basis for the rates they set.
Despite this requirement, on July 1, Nersa approved tariff increases for 178 licensed electricity distributors. Alarmingly, only 66 of these distributors had completed the necessary cost-of-supply studies. As a result, AfriForum estimates that at least 112 municipalities have been charging unlawful rates to consumers for over a month. This overcharging has sparked widespread concern, particularly among those who have already been struggling with high electricity costs.
The High Court’s refusal to grant Nersa’s appeal means that the ruling in favor of AfriForum must now be enforced. According to the ruling, all municipalities that did not submit the required cost-of-supply studies must revert to the electricity rates approved for the 2023/24 financial year. This decision is expected to provide immediate relief to consumers who have been overcharged under the unlawful tariffs.
Looking ahead, the court’s ruling also has implications for future tariff adjustments. Municipalities seeking to raise tariffs for the 2024/25 financial year will need to submit the necessary cost-of-supply studies within 60 days. Only then will their applications for tariff increases be reconsidered. This step aims to ensure that any future rate hikes are based on a transparent and legally compliant process, preventing the kind of arbitrary increases that have led to the current situation.
In response to the court’s decision, AfriForum has announced that it will take further steps to protect consumers’ rights. The organization plans to send an urgent letter to Nersa, demanding a clear plan of action for refunding consumers who have been overcharged. AfriForum is calling on Nersa to provide a detailed list of the municipalities that failed to submit the required studies, which would allow for close monitoring of the court order’s implementation.
Morné Mostert, AfriForum’s local government affairs manager, acknowledged the significant impact this ruling will have on municipal budgets. Many municipalities will need to adjust their financial plans to account for the loss of revenue from the higher tariffs. However, Mostert emphasized that this correction is necessary to protect consumers, who have long been treated as “cash cows” by what he described as incompetent municipal administrations.
AfriForum is also exploring ways to assist consumers in navigating the dispute process. The organization recognizes that while the court’s ruling can be relatively easily implemented for consumers with standard municipal accounts, it may be more challenging to address the issue for those using prepaid electricity. The unique nature of prepaid electricity services, where consumers pay in advance for their usage, complicates the process of issuing refunds or adjusting future charges.
AfriForum has made it clear that it will continue to advocate for consumers’ rights and ensure that the court’s decision is fully implemented. The organization is committed to holding municipalities accountable and ensuring that consumers are not unfairly burdened by unlawful charges. In the coming days, AfriForum is expected to announce further steps and provide guidance to consumers on how they can participate in the process to recover overpaid funds.
