by Paul Burkhardt
(Bloomberg) — A South African court told the nation’s energy regulator to review its decision to allow Eskom Holdings SOC Ltd. to increase power prices from April 1 after a group of businesspeople argued the state-owned utility needed to be more open about its expenses.
A group of companies in Port Elizabeth alleged it was unlawful for the National Energy Regulator of South Africa to give Eskom permission to recoup expenses it hadn’t budgeted for in fiscal 2014 by raising tariffs an average 9.4 percent in April instead of the more than 8 percent initially allowed. Those corporate customers, including light-alloy wheelmaker Borbet SA’s local unit, said the utility should have provided more regular updates on its financial situation, Eskom spokesman Khulu Phasiwe said.
The North Gauteng High Court on Tuesday said judging price applications isn’t part of its competency and sent the decision back to the regulator, said Phasiwe, adding that Eskom is studying the ruling. Nersa is also “studying and analyzing” the ruling, before communicating its position, the regulator said in an e-mail.
I've just read judgement by Judge C Pretorius reducing Eskom's price increase in 1 Apr 2016 from 9,4% to 3,5%, & Eskom must be shuddering.
— Chris Yelland (@chrisyelland) August 16, 2016
Eskom, which provides about 90 percent of the country’s electricity, had to buy diesel to run costly emergency turbines in 2014 and 2015 to curb regular power cuts in the continent’s most-industrialized economy. Power prices in South Africa have almost quadrupled since 2007, when the country first had shortages that resulted in scheduled cuts known as load-shedding.
Eskom has stabilized the performance of its plants and rolled out a cost-cutting program that saved 17.5 billion rand ($1.3 billion) in the year ended March 31, about a third more than targeted. The producer had wanted to increase prices by 18 percent in the year that started April 1.
