Gauteng High Court condemns Eskom-Nersa settlement for lack of public feedback

IN a landmark ruling, the Gauteng High Court in Pretoria has vehemently rejected a controversial behind-closed-doors settlement between Eskom and the National Energy Regulator of South Africa (Nersa), which had the potential to saddle consumers with an additional R54 billion. The court's decision comes as a powerful rebuke to the notion that regulatory matters can be conducted without public oversight, marking a significant moment in South Africa's ongoing energy crisis.

The settlement was initially proposed to address an error in Eskom's allowable revenue determination, a financial miscalculation that could have led to annual electricity tariff increases of nearly 9%. The case revolved around Eskom's Multi-Year Price Determination (MYPD) application, but rather than pursuing it as a traditional court review, Eskom sought an order to validate the settlement, effectively sidestepping the necessary public engagement process. Judge Jan Swanepoel did not hold back in his critique, stating that it was “untenable” for such a decision to proceed without public participation.

The court order, issued on Sunday, not only declined to endorse the R54 billion settlement as a legal agreement but also remitted the matter back to Nersa, emphasising the necessity for public consultation before any final resolution is reached. This decision reflects the court's commitment to transparency and accountability in a sector where consumers are already feeling the burden of exorbitant energy costs.

Consumer rights group AfriForum and the Minerals Council of South Africa had intervened in the proceedings, arguing against the secretive nature of the settlement and highlighting that Nersa’s own court filings revealed their awareness of the potential backlash. The group pointed out that the settlement sought to ensure Eskom’s desired outcome while avoiding scrutiny or exposure in an open court, a strategy the judge deemed inappropriate.

Amid the turmoil, Judge Swanepoel scrutinised the settlement's figures, noting that the R54 billion appeared arbitrary, labelling the compromise as “little more than a thumb-suck." He spotlighted a significant shortcoming in Nersa's approach, namely its admission that their own revenue calculations had been flawed to the tune of R107 billion, prompting questions about the integrity and rationale behind their proposed agreement with Eskom.

"The proposition that a major amendment to tariff decisions could occur without public participation offends the principle of transparency," Judge Swanepoel articulated, underscoring the broader implications for every electricity consumer in South Africa.

This judicial ruling is not an isolated incident; it follows a recent court decision, reaffirming that Nersa’s implementation of municipal electricity tariffs lacked the required public cost studies and consultations, rendering their actions unconstitutional. Stakeholders are left questioning the future of energy regulation in South Africa as the court stands firm on the importance of public engagement in such crucial matters.