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High court dismisses Eskom’s urgent application to hike tariffs

With loadshedding being downgraded to Stage 1 on Monday morning, today is proving to be brimming with good news about Eskom, at least for citizens.

This afternoon the Judge Jody Kollapen at the North Gauteng High Court in Pretoria dismissed Eskom’s urgent application to increase tariffs by 16.6 percent and 16.7 percent over the next two years.

“The determination of a suitable tariff requires a careful weighing and balancing of factors. The legislature has appointed a specialist body that has the expertise to do precisely that and the court should respect those carefully crafted boundaries,” said Kollapen according to a report by Business Day.

This comes after Eskom approached the court following a decision by the National Energy Regulator of South Africa (Nersa) last year.

That decision saw Eskom’s request to hike tariffs by 17.1 percent, 15.4 percent and 15.5 percent between 2019 and 2021 rejected. Instead Nersa said that Eskom would be allowed to increase it’s prices by 9.41 percent, 8.1 percent and 5.2 percent between the aforementioned period.

While Eskom’s urgent application was turned down, the utility still has the chance to argue the merits of its case in Part B of the review process.

“We understand and respect the decision of the Court and will follow its guidance on the matter. Our case had two parts, the first (Part A) where we were asking that the matter is heard urgently in order to enable Eskom to receive and implement a tariff decision before the beginning of the financial year in April 2020 and the second part (Part B), which is the hearing of the matter itself where Eskom is challenging the regulator’s decision on its treatment of the shareholder equity in MYPD 4 [multi-year price determination] decision,” said Eskom’s chief financial officer, Calib Cassim in a statement.

That “shareholder equity” is a R23 billion cash injection Eskom received from shareholders and Eskom argues that Nersa treated those funds as revenue which it says skewed the numbers.

“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. 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,” added Cassim.

The hearing for Part B of Eskom’s case will reportedly be expedited.

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