Eskom: High Court dismissed our application on urgency, not merit

The High Court in Pretoria has dismissed Eskom’s urgent application to implement electricity tariff hikes of 16.6% and 16.7% over the next two years.

Judge Jody Kollapen dismissed the request as not urgent, but stated that the merits of the case would be heard in Part B of the review process. 

Eskom had sought interim relief, wanting 16.6% and 16.7% tariff hikes over the next two years. It argued that a lower increases threatened its financial viability.

The application was split in two parts. Part A sought an order to allow the company to implement a tariff decision before the beginning of the financial year in April 2020, and Part B involved a challenge of the regulator’s decision to withhold part of its equity in the multi-year price determination (MYPD 4) ruling. 

Nersa had granted Eskom increases of 8.1% and 5.2%.

Urgency, not merit

On Monday afternoon, Eskom said it was encouraged that the application was dismissed on urgency, not merit.

"At the root of the matter is the fact that we do not agree with Nersa's deduction of the R23 billion that we received from the shareholder, treating it as revenue," said Calib Cassim, Eskom Chief Financial Officer. "We are therefore encouraged by the fact that while the judgement says the matter is not urgent, it was indicated that there is merit in our case...We will await the next phase of the court case in order to finalise the recovery of the equity provided by government that we believe was incorrectly deducted."

In its court papers, Nersa said it rationally considered the sustainability of Eskom when it included the R23 billion cash injection Eskom would get every year from government between 2019/20 and 2021/22 to arrive at the approved tariffs.

The cash-strapped entity, which is battling high debt levels, said the judgment indicated that Nersa violated a basic principle of accounting by treating an equity injection as revenue.

The move to take the regulator to court over tariff increase dispute is unprecedented. Nersa said the only time its decision was challenged in court was in 2008, when the Midvaal Municipality disputed its licensing decision.

Compiled by Sibongile Khumalo.