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This week’s Supreme Court of Appeal ruling that set aside the Port Elizabeth business consortium’s case against NERSA and Eskom, is of serious concern to OUTA. The case involved a challenge against NERSA and Eskom to ensure they operate within the governance and rules required of them in the Electricity Regulations, which the applicants believe has not been the case during recent electricity tariff hike applications.

While OUTA agrees somewhat to the court ruling that it is NERSA’s role to regulate Eskom’s governance and adherence to the regulations, our concern is that Nersa has not been challenging enough and have on too many occasions, acceded to Eskom’s demands and bent the rules.

“This conduct by Nersa has rendered them relatively toothless and the judgment will only make matters worse,” says Ted Blom – OUTA’s Director for Energy. “The public and civil society have on numerous occasions complained about inefficiencies, lack of governance and extent of corruption within the state-owned entity. We are disappointed by Nersa siding with Eskom instead of shielding consumers from excessive tariff hikes which have seen electricity prices soar by over 500% since 2007”.

This judgement will now provoke a stronger approach by civil society, to ensure that NERSA plays its role more meaningfully by batting for the people and holding Eskom to account for their wasteful expenditure and growing inefficiency.

“We believe this judgment ignores the reality of state capture and corruption which the public is now being forced to tolerate through higher electricity tariff hikes. This is a matter which requires urgent attention as the current trend will bring substantive pressure to bear on the consumer,” says Blom, “Higher electricity costs will trigger a downward spiral in demand and the end of Eskom’s ability to sustain itself.”

OUTA will be making presentations to NERSA during Eskom’s forthcoming MYPD hearings, and has already called on NERSA to ensure Eskom is transparent and provides efficiency indicators that are acceptable before any tariff hike is considered.  Meantime, Eskom continues to display poor leadership and questionable costs related to their operating conditions.

Issued by OUTA