In a landmark decision that significantly impacts electricity consumers across South Africa, NERSA ordered by court to overhaul its entire municipal electricity tariff approval process. The Pretoria High Court ruled that the National Energy Regulator of South Africa (NERSA) had been operating unconstitutionally when approving municipal electricity price increases, marking a major victory for consumer rights and transparency.
This ruling comes after civil rights organisation AfriForum challenged NERSA’s methods, arguing that the regulator had systematically failed to follow proper procedures. The court’s decision could reshape how electricity tariffs are determined for millions of South African households and businesses.
Why NERSA ordered by court to change its approach
The High Court found that NERSA had been approving municipal electricity tariff increases without conducting adequate cost studies or allowing meaningful public participation. This violated fundamental constitutional principles of fair administrative action and transparency.
According to the ruling, NERSA had been rubber-stamping tariff applications from municipalities without properly scrutinising whether the requested increases were justified. This meant consumers had no opportunity to challenge potentially unreasonable price hikes or understand the basis for these increases.
The constitutional violations identified
The court identified several critical failures in NERSA’s process:
- Municipalities were not required to submit detailed cost breakdowns showing how they calculated their proposed tariff increases
- Public consultation periods were inadequate or non-existent, preventing consumers from making informed submissions
- NERSA approved applications without verifying the accuracy of information provided by municipalities
- There was insufficient transparency about the decision-making criteria used to approve tariff increases
New timelines for electricity tariff approvals
With NERSA ordered by court to implement constitutional procedures, specific timelines have been established to ensure proper public participation in future tariff decisions. These timelines aim to create a more transparent and accountable system.
The court mandated that NERSA must announce Eskom’s latest bulk electricity tariffs by 31 January 2026. This is crucial because these wholesale prices form the foundation for what municipalities subsequently charge their consumers.
The complete approval timeline
The new process follows a structured approach:
- By 31 January 2026 – NERSA must publish Eskom’s bulk electricity tariffs
- By March 2026 – Municipalities must submit their final tariff applications to NERSA, including detailed cost studies
- By 5 May 2026 – NERSA must finalise its decisions on each municipality’s proposed electricity tariffs
These deadlines ensure sufficient time for public consultation and proper regulatory scrutiny before tariff increases take effect. The court has also issued a rule nisi with a return date of 18 November, requiring municipalities to provide reasons why these timelines should not be approved.
What this means for electricity consumers
The ruling that NERSA ordered by court to reform its processes represents a significant win for consumer protection. South Africans will now have genuine opportunities to participate in decisions that directly affect their household budgets.
Under the new system, municipalities will need to provide transparent justifications for any proposed tariff increases. Consumers, community organisations, and businesses will be able to scrutinise these applications and make informed objections if the increases appear unjustified.
Improved transparency requirements
The court ruling requires municipalities to submit comprehensive cost studies as part of their tariff applications. These studies must break down exactly how the proposed tariffs were calculated, including distribution costs, maintenance expenses, and other operational factors.
This level of detail was previously absent, allowing municipalities to request increases without proving they were necessary or reasonable. The new requirements create accountability that protects consumers from arbitrary price hikes.
Industry response and implementation
Following the court decision, municipalities have reportedly agreed to AfriForum’s proposed draft order establishing the new timelines. This cooperation suggests recognition that the previous system was indeed flawed and needed reform.
NERSA now faces the challenge of implementing these changes whilst processing pending tariff applications. The regulator will need to develop new procedures, train staff, and create systems for managing the enhanced public participation requirements.
Potential impact on pending applications
The ruling may affect electricity tariff applications currently in NERSA’s pipeline. Municipalities that submitted applications under the old, unconstitutional process may need to resubmit with proper cost studies and undergo legitimate public consultation.
This could delay some tariff increases but ultimately ensures they are properly justified and constitutional. Consumers who felt steamrolled by previous approval processes now have legal grounds to demand proper procedures.
Looking ahead – a more accountable system
With NERSA ordered by court to fundamentally change its approach, South Africa’s electricity tariff approval system should become more transparent and accountable. The ruling establishes important precedents about regulatory obligations and consumer rights.
The decision reinforces that regulators cannot bypass constitutional requirements for administrative fairness, even in complex technical domains like electricity pricing. Public participation is not optional but a fundamental requirement that protects citizens from arbitrary state action.
For households and businesses struggling with rising electricity costs, this ruling offers hope that future increases will at least be properly justified and subject to scrutiny. Whilst it may not prevent all tariff increases, it ensures they occur within a constitutional framework that respects consumer rights.
Conclusion
The court decision declaring NERSA ordered by court to reform its municipal electricity tariff approval process marks a pivotal moment for energy regulation in South Africa. By establishing clear timelines, transparency requirements, and genuine public participation, the ruling protects consumers whilst maintaining a functional regulatory system.
As the new procedures take effect from 2026, South Africans can expect more openness about how their electricity prices are determined. This accountability is essential for building trust in regulatory institutions and ensuring that necessary tariff increases are implemented fairly and constitutionally.
Sources
- Moneyweb – Court orders Nersa to show municipal electricity costs
- Daily Maverick – Nersa’s process for approving municipal electricity tariff hikes is unconstitutional, High Court rules
