Two business chambers have asked the Gqeberha High Court to set aside the methodology followed by theThe application has been brought by the Nelson Mandela Bay Business Chamber and theagainst Eskom, Nersa and the City of Johannesburg.
He said that by law municipalities can include a recovery of the cost of supplying energy and a reasonable margin of return on their investment in their price increases, but costs that are lost to inefficiencies within the municipality must be subtracted. He said charges for the continued improvement of electricity supply may be added if the municipality undertakes upgrades.
That was the big problem with Nersa using benchmarking to determine electricity prices, as this has “no relationship to the cost of supply. There has never been a set of tariffs based on the cost of supply.” In a letter signed by the chamber’s CEO, Denise van Huyssteen, businesses in the notoriously unstable metro expressed their concern over what Van Huyssteen called “the large-scale failures” by the metro to comply with its electricity provider licence conditions and requested that the municipality be replaced by Eskom as a service provider.
“Increasing electricity losses of well above 20% through uncontrolled theft leave not only the electricity distribution function in financial distress but losses of such magnitude also pose a threat to the financial sustainability of the municipality itself. This further threatens delivery of other crucial municipal services.
“The metro is not able, and has for many years been unable to provide such structures. The gradual decline of the quality of electricity supply leads to unacceptable strain on industry and business within the NMBM … Business will gradually disappear from the metro. In its 2021/22 submission to Nersa, the Association of South African Chambers said it was frustrated by the regulator’s unwillingness or incapability to bring a positive change to the municipal electricity supply industry.