No go for Eskom-Nersa R54bn secret settlement

The High Court in Pretoria has overturned a controversial R54 billion settlement reached in secret between Eskom and the energy regulator Nersa, which would have resulted in increased electricity tariffs for consumers. The court found that Nersa had not accurately determined the amount owed to Eskom and that the settlement was reached without public participation, violating principles of transparency and procedural fairness.

The dispute originated from Nersa’s initial revenue determinations for Eskom, which Eskom challenged, claiming an additional R107 billion was due to errors in the regulatory asset base and depreciation calculations. While Nersa and Eskom negotiated a settlement of R54 billion, the court determined that the regulator’s motivation for settling was, in part, to avoid public scrutiny and potential legal repercussions. The court emphasized that all decisions by the energy regulator must be consistent with the Constitution, applicable laws, and be procedurally fair, allowing for public input.

As a result, Nersa must now redetermine the additional amount owed to Eskom, providing the public with an opportunity to contribute to the decision-making process. This ruling may delay Eskom’s recovery of the funds, as the redetermination and tariff adjustments may not be finalized before the deadline for notifying municipalities of bulk tariffs.

(Source：The Citizen)