Nersa: Unlawful Electricity Tariffs Acknowledged in Pretoria High Court

• Nersa has admitted in the Pretoria High Court that electricity tariffs for Johannesburg, Ekurhuleni, Nelson Mandela Bay, Emfuleni, and Madibeng were unlawful due to errors in tariff applications.
• The regulator approved these tariffs without proper verification, leading to its concession that the approvals were "indefensible."
• Judge RG Tolmay is seeking a lasting solution to compensate overcharged customers and prevent continuous litigation over incorrect tariffs.
• Nersa and affected municipalities have a history of failing to comply with court orders in similar cases, leaving businesses without relief.
• Legal challenges are ongoing, with attorneys preparing further actions against current Nersa tariffs in various municipalities.

The lawyers make money and the taxpayers pay for it. Every few weeks there is another court application. The legal position is clear, but how does that help anyone?

The National Energy Regulator of South Africa (Nersa) has formally acknowledged in the Pretoria High Court that the electricity tariffs it sanctioned for the preceding financial year were unlawful across three metropolitan areas and two local municipalities. This admission, central to the ongoing legal proceedings concerning Nersa unlawful electricity tariffs Pretoria High Court, specifically implicates Johannesburg, Ekurhuleni, and Nelson Mandela Bay metros, alongside the Emfuleni and Madibeng municipalities. A primary cause for this regulatory lapse was identified as significant inaccuracies within the data submitted by these entities to support their tariff applications, which Nersa subsequently approved without adequate verification.

Following interventions by major electricity consumers who presented evidence of these discrepancies in court, the regulator found itself in a position where it had to concede the "indefensible" nature of its approvals. This situation underscores a critical flaw in the Nersa tariff approval errors process, where fundamental checks were apparently bypassed, leading directly to the imposition of illegal charges on consumers. The court is now tasked with devising a comprehensive remedy to compensate those who have been overcharged, while simultaneously seeking to prevent a deluge of similar legal challenges aimed at overturning Nersa's tariff decisions due to comparable errors.

The judiciary is actively seeking a definitive resolution to the recurring issue of unlawful electricity tariffs, with Judge RG Tolmay presiding over the latest applications. During proceedings on November 9, it was revealed that businesses in Nelson Mandela Bay faced electricity costs that were 76% higher than the actual supply cost for the 2025/26 period. Judge RG Tolmay electricity tariffs scrutiny has unequivocally stated her intention to issue an order that provides tangible relief, thereby precluding electricity users from being compelled to repeatedly return to court over incorrectly set tariffs. She expressed concern that "The lawyers make money and the taxpayers pay for it. Every few weeks there is another court application. The legal position is clear, but how does that help anyone?" emphasizing that this cycle "cannot go on indefinitely."

To address this persistent problem, Judge Tolmay has suggested innovative solutions, including the potential appointment of an independent expert to precisely quantify the extent of overcharging, ensuring affected customers receive prompt credits. She also raised the prospect of implementing stricter court oversight to guarantee the effective implementation of any final order. This judicial stance comes against a backdrop of historical non-compliance, as Nersa and various municipalities have frequently failed to adhere to previous court directives in similar cases, leaving successful applicants without the promised redress. For instance, approximately a year prior, Judge Anthony Millar, in the same court, declared Nersa-approved tariffs for 2024/25 in Johannesburg, Ekurhuleni, Madibeng, and Msunduzi to be unlawful, referring the matter back to Nersa for correction. However, Nersa missed the June 30 deadline for redetermination and had still not finalized it by November, leading to the application of either the previous year's tariffs or the equivalent Eskom tariff as per the court order, offering some relief to businesses facing unlawfully high charges.

The financial repercussions of these unlawful tariffs are substantial and far-reaching. The Msunduzi Municipality, for example, is reportedly obligated to issue credits amounting to approximately R200 million to nearly 700 businesses that were members of the Pietermaritzburg and Midlands Chamber of Business when their case was initiated, though these credits have yet to be disbursed. This situation is not isolated; the court has been informed of numerous similar municipal electricity tariff litigation South Africa cases brought over the past decade. Notably, Madibeng municipality has not implemented a lawful tariff since around 2013, illustrating a systemic and prolonged issue.

In these instances, both Nersa and the implicated municipalities have consistently failed to comply with judicial orders, effectively denying prejudiced customers meaningful relief despite their legal victories. Attorney MC Botha, an attorney at Pieterse Sellner Erasmus TRM Tax Attorneys, representing entities such as the Casting, Forging and Machining Cluster of South Africa (CFMC), Autocast SA, Mpact, and Coega Steels in the current applications, has indicated that he is already preparing additional court challenges against this year's Nersa tariffs in various other municipalities. This suggests an ongoing wave of litigation as businesses seek to rectify historical overcharges and prevent future occurrences, particularly given that Ekurhuleni electricity tariff overcharge issues persist and the municipality has expressed strong opposition to providing refunds.

The admission by Nersa of unlawful electricity tariffs in several metros, coupled with the High Court's intent to find a lasting solution for overcharged customers, presents a significant opportunity for legal practitioners to advise and represent businesses seeking redress for past overpayments. Compliance officers in affected municipalities should proactively review their electricity billing history and assess potential claims for refunds, given the court's focus on ensuring actual relief and preventing future recurrences.

Source: Original reporting via Moneyweb