AfriForum has obtained a court order stopping a settlement between Nersa and Eskom that would have seen consumers pay an additional R54-billion for electricity. (Photo: Waldo Swiegers / Bloomberg via Getty Images) 
Civil rights organisation AfriForum has obtained a court order temporarily halting an agreement between Eskom and the National Energy Regulator of South Africa (Nersa) from being finalised. The pact would have seen another sharp increase in electricity prices over the next three years.
The order, handed down by the Gauteng Division of the High Court in Pretoria, allows AfriForum to intervene in the review application where Eskom asked that the tariff determinations done by Nersa be set aside.
On January 30, Nersa approved a 12.7% tariff increase for Eskom for the 2025/26 financial year. The regulator cited the pleas of South Africans who testified during hearings that they would not be able to afford food and electricity if Eskom’s original proposal of 36% was granted.
In July, Eskom filed papers at the Gauteng Division of the High Court in Pretoria to have this decision by Nersa set aside. Eskom cited a R107-billion shortfall, but also a R54-billion data input error.
Before AfriForum intervened, Nersa and Eskom planned to have this review application settled out of court by allowing the electricity generator to increase its tariffs by R54-billion over the next three financial years on top of the increases announced in January. Any such agreement, however, would have needed the parties to agree to a court order.
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However, in a statement issued in August, Nersa spokesperson Charles Hlebela said they decided not to oppose Eskom’s review application “drawing on the findings from the founding papers and relevant case law on administrative decision reviews”, and therefore proposed the settlement instead.
“It is important to note that as this is a judicial review consideration, Nersa cannot undertake the public participation process normally followed when considering applications. The settlement between Eskom and Nersa can only be effective after it has been made an order of the court, which has not yet been secured, and which has delayed the release of this media statement to avoid pre-empting the decision of the courts,” he said in July.
He further explained that the reasons for the settlement was to avoid prolonged litigation, enabling both Nersa and Eskom to focus on their core mandates.
“The phased implementation of the settlement mitigates immediate tariff shocks to consumers,” he added.
The settlement also comes as Eskom posted an after-tax profit of R16-billion at the end of September.
But AfriForum filed an application to intervene in the case and halt plans to settle it in this way. While Eskom initially refused to allow them to provide input in the case, the electricity generator later agreed.
“Neither AfriForum nor the public at large has a right to veto the settlement,” read a letter from Eskom’s legal team, which is part of the court records.
AfriForum said in a statement issued last week that Eskom has now agreed to transfer the case from the uncontested to the contested role and that this agreement was made an order of the court.
“To say that the public, who must fund the decision, has no interest in the matter shows Eskom’s blatant arrogance and it can no longer be tolerated and blindly funded,” said Deidré Steffens, AfriForum’s adviser for Local Government Affairs.
In her affidavit before court, she also said the settlement proposal questions Nersa’s efficiency in fulfilling its statutory duties and accountability.
“The general public cannot be expected to bear higher tariffs negotiated behind closed doors,” she said.
She added that there must be some level of transparency from Nersa whether errors were made, why and how, and what steps will be taken to prevent this from happening in future.
Read more: After the Bell: The electricity pricing farce continues, but something’s about to give
In her affidavit before court, Steffens stated that consumers must be given a chance to be heard on this settlement.
“Almost every person in South Africa is affected by this application, but very few are aware of the manner in which their rights are affected,” Steffens’ affidavit reads. She explained that AfriForum has been accepted as a stakeholder to provide input in Nersa’s tariff determinations.
Steffens points out that the electricity tariff increases, as they stand, are already three times higher than the country’s inflation rate.
The settlement, if implemented, will provide a significant blow to the working class and impoverished households, she added. She added that consumers will be twice affected by the higher increases as it will also affect the price of goods and services.
“The R54-billion settlement does not conform to the principles of balance and fairness,” Steffens’ affidavit continues.
She pointed out that Nersa had failed in its mandate by settling the case, explaining that if Eskom was successful in its review of the case it would have been sent back to Nersa for a reconsideration.
This, Steffens pointed out, would have involved “some form of public notification and participation”.
She said in agreeing to the settlement with Eskom, Nersa did not consider affordability and impact of the newly proposed increases to the consumer.
“This settlement is yet another example of Nersa’s secretive decisions, which literally keep the public in the dark,” Steffens added.
She said the settlement further is a “quick fix” to a much larger problem as Eskom must move beyond relying solely on higher tariffs and revise its financial model.
“This development is a victory for transparency and consumer rights. AfriForum will ensure that the public’s voice is heard, and that Nersa and Eskom are held accountable for their decisions,” Steffens added. DM