Nersa rejects tariff increase

2013-09-18 00:00

NO, you may not increase electricity tariffs by 10%.

This was the National Energy Regulator of South Africa’s (Nersa) emphatic response to the Msunduzi Municipality’s bid to increase its power tariffs beyond the seven percent approved for municipalities.

Nersa had turned down Msunduzi’s initial application to increase tariffs by 10%, but the municipality had appealed against the decision in terms of the regulator’s processes.

Yesterday, Nersa spokesperson Charles Hlebela said the decision to approve a seven percent tariff increase for Msunduzi stands.

“Nersa couldn’t find a justifiable motivation for the requested increase.”

However, he said the municipality could take the regulator’s latest decision to the high court for review.

There was no indication yesterday of whether the municipality would exercise this option.

NGOs and political parties in the council welcomed Nersa’s decision, saying it would protect the poor and businesses from crippling electricity prices.

Msunduzi Rates Forum chairperson Babs Sithapersad said people were already paying large amounts for services, while Pietermaritzburg Agency for Community Social Action (Pacsa) director Mervyn Abrahams said they supported Nersa’s position.

“Already many poor households cannot afford electricity, and it is worse for prepaid [customers], who pay even more,” said Abrahams, calling on the municipality to accept Nersa’s decision.

Dumisani Mthalani, of the South African National Civic Organisation (Sanco), said this was good news because a number of people were unemployed and many of those with jobs were earning low salaries.

A high tariff increase would have made it difficult for them to survive, he said.

“We are very happy with Nersa’s decision to refuse Msunduzi’s 10% electricity increase. This would also have had a negative impact on businesses, which would have experienced profit losses, leading to further job losses.

“We are over the moon and very happy for the community of Pietermaritzburg,” said Mthalani.

Political parties also welcomed the decision. Dolo Zondi of the IFP said that rather than passing the cost of tariff increases to the poor, the municipality should make better use of available resources and readjust its budget.

Democratic Alliance caucus leader Bill Lambert said he was not aware that Nersa had made a ruling on Msunduzi’s appeal, but the decision did not come as a surprise because the regulator had made it clear in its recommendations that it wanted a seven percent increase for Msunduzi.

“The budgeting process has to be reworked, and this is what the DA had predicted. This is so in our alternative budget, which was in line with the Nersa recommendation,” he said.

Ntokozo Bhengu of the National Freedom Party welcomed the decision, saying the 10% increase would have proved expensive for many of the poor.

“We are also aware that there is a need for service delivery. However, we accept the decision,” said Bhengu.

Business and residents had argued that the tariff increases were above inflation and did not take into account the socio­-economic conditions in Pietermaritzburg.

The recent census showed that unemployment stood at 33% in the city and the average household income was R108 926 a year. Unemployment Insurance Fund (UIF) claims in March this year were more than five times higher than at the same time last year.

Mayor Chris Ndlela said he was unaware that Nersa had responded to their appeal. “Naturally, it will be premature to respond now,” he said.

After the new budget came into effect on July 1, the municipality put tariffs up by 10%, despite the matter being before Nersa.

When Nersa turned down the initial application, the Pietermaritzburg Chamber of Business (PCB) advised its members to pay seven percent more instead of 10%, pending the outcome of the appeal.

Municipal manager Mxolisi Nkosi told a full council meeting in August that the municipality would revert to charging seven percent more if directed to do so, and would find a way to credit customers who had been billed 10% more in July.

He had previously said that local economic conditions, input costs and the affordability of services were taken into account when tariffs were revised. He said the tariffs were also set to ensure the city’s financial sustainability.

There was no comment from the municipality on the matter yesterday.

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