By Johnathan Paoli
AfriForum has welcomed the recent North Gauteng High Court rejection of an attempt by Eskom and the National Energy Regulator of South Africa (Nersa) to settle a major electricity tariff dispute through a proposed R54 billion agreement concluded behind closed doors, a move the organisation says would have allowed the power utility to recover billions from consumers without proper public scrutiny.
The ruling, delivered on Sunday, follows a legal challenge in which civil society group AfriForum intervened, arguing that the proposed settlement was unlawful and fundamentally undermined transparency and public participation in electricity tariff setting.
The court reviewed and set aside Nersa’s original allowable revenue decision and refused to make the settlement agreement an order of court.
At the centre of the dispute was Eskom’s Multi-Year Price Determination tariff application and an error identified in Nersa’s calculation of Eskom’s allowable revenue.
Rather than referring the matter back to the regulator for correction through established regulatory processes, Eskom and Nersa attempted to resolve the issue through a negotiated settlement that would have enabled Eskom to recoup approximately R54 billion from electricity consumers via higher tariffs.
AfriForum intervened in October after Eskom’s initial court application to review Nersa’s decision was abruptly converted into a settlement agreement.
The organisation argued that the process effectively sidelined the public and avoided the statutory investigations and consultations required for decisions with far-reaching economic consequences.
In its judgment, the court found that Nersa’s original revenue decision was unlawful, irrational and based on material calculation errors.
Crucially, it rejected the idea that such defects could be cured through a private compromise between the regulator and the regulated entity.
The court emphasised that electricity tariff determinations affect all South Africans and that transparency and meaningful public participation are non-negotiable components of lawful regulation.
The court was particularly critical of Nersa’s own reasoning in support of the settlement.
AfriForum placed before the court Nersa’s admission that one perceived benefit of the agreement was that it would bind the parties and avoid having sensitive details aired in open court, thereby limiting scrutiny and the possibility of a wide-ranging judgment.
The court found this approach to be contrary to public policy, constitutional principles and the statutory framework governing electricity regulation.
“This judgment confirms that Nersa cannot quietly negotiate away the rights of electricity consumers in order to shield itself from accountability. The court made it clear that convenience cannot justify secret deals that would saddle the public with billions in additional costs,” Morne Mostert, AfriForum’s Manager for Local Government Affairs said.
The court ordered that the matter be referred back to Nersa for reconsideration, with due regard to proper methodology, written submissions and lawful procedure.
It stressed that the complete absence of public participation in the settlement process rendered it fundamentally flawed.
AfriForum and the Minerals Council of South Africa were both found to have a direct and substantial interest in the proceedings and were entitled to intervene.
Eskom and Nersa were ordered to pay the legal costs of both intervening parties.
Describing the outcome as a significant victory for electricity users, Mostert said the judgment sent a clear message that neither Eskom nor Nersa is above the law.
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