Electricity tariff hike approval unconstitutional

The City of Cape Town has welcomed a major High Court ruling that forces the National Energy Regulator of South Africa (Nersa) to make electricity tariff decisions on time.

Judge Labuschagne handed down the judgment in the North Gauteng High Court on Friday. He found that Nersa’s process for setting municipal tariffs for the 2025/26 financial year was unconstitutional. The court declared the regulator’s public participation process invalid under section 172(1)(a) of the Constitution.

However, the judge stopped short of overturning tariffs already approved. He said that setting them aside would cause “uncertainty and disruption” in municipal finances.

The ruling followed an urgent application by AfriForum. The group accused Nersa of handling tariff applications late and without transparency. The City of Cape Town joined the case as the 14th respondent and made submissions proposing a new timetable for Nersa’s decisions. The court accepted the City’s proposals and made them part of its order.

Nersa must now notify municipalities of Eskom’s bulk electricity increases by 31 January each year. Municipalities must submit their tariff applications and cost-of-supply studies by 30 March. Nersa must then publish these applications for public comment and finalise all decisions by 5 May. The reasons for each decision must be made public at the same time. The court also ruled that Nersa may not deviate from these deadlines without good cause and prior notice.

The court issued a rule nisi, returnable on 18 November 2025. Nersa and other respondents must show why the order should not be made final. Until then, the new time frames remain in effect.

Judge Labuschagne found that Nersa had “fundamentally undermined” public participation. He said the regulator issued notices too late, withheld cost-of-supply studies, and failed to publish information in newspapers or multiple languages, as required by law.

In one case, the court found that Nersa approved Mogale City’s tariff just a day after publication—leaving no time for public comment. The judge said Nersa’s claim that cost-of-supply studies were confidential was “beyond concerning” and unlawful.

He ruled that the regulator’s consistent delays had affected municipalities’ ability to prepare budgets. Under the Municipal Finance Management Act, councils must adopt budgets by 30 June each year. Late tariff approvals had also undermined public participation in the budget process.

Cape Town Mayor Geordin Hill-Lewis welcomed the outcome. “This is a positive step for residents in all municipalities across South Africa, who will benefit from more transparency in electricity tariff-setting decisions,” he said. “The order also halts Nersa’s chaotic and delinquent handling of municipal tariff applications. The timetable ends late decisions that often come after the financial year has already begun.”

Hill-Lewis said the City has long asked for rational, on-time decisions. Cape Town is one of few municipalities that submits detailed cost-of-supply studies each year. He said the ruling will bring consistency and openness to how tariffs are set across the country.

Nersa has until 18 November to explain why the order should not be made final.