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Outa has dim view of power hike

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Eskom’s implementation of a 9.4% electricity tariff increase on April 1 as approved by the National Energy Regulator South Africa (Nersa) is hanging in the balance.

The Organisation Undoing Tax Abuse (Outa) has turned to the high court in Pretoria for an urgent application in an attempt to obtain an interdict against the implementation of the increase.

As matters stand, Eskom customers will see the tariff increase with effect from April 1, in accordance with the approval granted earlier this month. Municipal increases, meanwhile, will be implemented when the new financial year starts on July 1.

Outa said over the weekend that after various unfruitful requests to receive the written reasons from Nersa for its decision to permit Eskom to implement the electricity tariff increase, it was left with no choice but to approach the court.

“As matters stand now, we will be in court on March 31 for the application for an interdict to be heard. We have concerns regarding the lack of transparency and manner in which Nersa arrived at their decision to approve the tariff,” said Ivan Herselman, Outa’s director of legal affairs.

“We simply had to react and challenge Nersa’s approval of the increase and Eskom’s implementation thereof, while the public is being left in the dark as to why this has been approved.”

The organisation – formerly known as Opposition to Urban Tolling Alliance – said Nersa declined to provide details around their decision that gave rise to the implementation of the higher tariff.

In its response, Nersa cited possible “confidential” information which it must first clear with Eskom before it could be allowed to release parts of the information to the public, Outa said.

These answers would in all likelihood only come to the fore well after the electricity tariff increases had been implemented, and well outside the period the public was able to assess and comment on validity of the reasons for their decision, it stated. This casts doubt on the legitimacy of the entire public participation process, and it is Outa’s view that the tariff hike should be challenged before being implemented, according to Outa.

“Our executive team has unanimously decided that it is in the public’s best interests to intervene with haste, since it’s unlikely that this egg could ever be unscrambled after the tariff has already been increased,” Herselman said.

Eskom requested a R22.8 billion bailout for the costs incurred in the production of electricity during the 2013/14 financial year. The regulator, however, rejected this and instead approved a 9.4% tariff increase.

Eskom boss Brian Molefe said at the time Nersa’s decision did not address the question of the national power utility’s continued financial sustainability and thus would have operational consequences.

Molefe had said Eskom would study the reasons behind the decision before commenting on its implication.

The Public Enterprises Ministry also said it would study the reasons for the decision.

The Steel and Engineering Industries Federation of Southern Africa and AfriBusiness had indicated they were waiting for full disclosure of reasons for the approval of the increase.

If the high court rules in favour of Outa, Eskom will be prohibited from implementing the electricity tariff hike until Nersa has provided reasons for their decision.

“We need to be afforded an opportunity to challenge the decision and set it aside,” added Herselman.

[Source: Pretoria News]
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