The National Energy Regulator of South Africa (Nersa) has accused the eThekwini Municipality of overcharging customers regarding its electricity tariffs.
However, the municipality is disputing this claim and has taken the matter to court, arguing that the tariffs it is charging are fair and benchmarked against those of other municipalities.
The issue primarily concerns the tariffs charged to business customers. During an executive committee meeting yesterday, councillors expressed concerns that these revelations could lead customers to use Nersa’s position as a basis for legal action against the municipality, claiming they have been overbilled.
This matter came to light as the City discussed issues raised by its Audit Committee. In a statement, the City noted that at the Executive Committee (exco) meeting held yesterday, a report was presented on key issues escalated by the Audit and Risk Committee (ARC) for the period ending June, 30, 2024. This report provided an update on management’s actions and progress in response to significant matters raised in ARC’s previous quarterly report.
A primary concern discussed was the discrepancy between eThekwini Municipality’s municipal tariffs and the rates approved by Nersa. Approximately 1 100 business customers have been affected by these higher tariffs for the 2023/24 financial year, with the matter currently pending litigation.
The municipality is charging an average rate of 15.1% as per the overall approved tariff. However, Nersa believes that certain components of the energy charge for these 1 100 customers should be at a lower rate.
In an effort to expedite a resolution to the matter, the City said it is engaging in discussions with Nersa to address the discrepancy through a round-table meeting later this month. This proactive approach aims to resolve the matter promptly, avoiding a lengthy litigation process that may only commence in April next year.
The City said it remained committed to finding a collaborative solution with Nersa to ensure that tariff adjustments align with regulatory requirements and meet the needs of affected customers.
Councillors expressed concerns that the allegation of over billing painted the municipality in a negative light. EFF councillor Themba Mvubu stated: “We cannot be in the position of being seen as pickpocketing our own customers.”
Deputy Mayor Mbali Myeni asked officials to assure them that the City could not be sued by aggrieved ratepayers as a result of Nersa’s position on the matter.
“If customers come to us and say they are being overbilled, can they use Nersa’s position to take the municipality to court?” she questioned.
The head of legal in the municipality, Malusi Mhlongo, assured councillors that customers cannot use Nersa’s position to argue that they have been overcharged.
He explained that the City has its own tariff approval process, and the only way to challenge the tariffs charged would be to challenge the process itself; however, residents cannot directly challenge the tariffs.
The DA said it didn’t support the tariff increases based on the fact that the municipality implemented them before approval by the regulator and we warned against that.
“Now the municipality is incurring costs which could have been avoided. Those who supported these irregular tariffs should be held personally liable whether they are officials or councillors,” said DA councillor Thabani Mthethwa.
Nersa was approached for comment yesterday but the regulator had not responded by the time of publication.
This comes as Nersa is considering Eskom’s proposed tariffs for the next three years. Eskom had applied for a 36.1% tariff increase for direct customers in the first year in 2026, followed by a 12% rise in 2027 and another 9% in 2028.
Nersa said that a final decision was expected in late December or January 2025.
Nersa said the public hearings for KwaZulu-Natal will be held on November 21 and 22.