A South African court has rejected a 54 billion-rand ($3.2 billion) settlement between the country’s energy regulator and power utility Eskom over a tariff-calculation error.
- The South African High Court rejected a R54 billion ($3.2 billion) settlement regarding an electricity tariff miscalculation involving Eskom.
- The court criticised the lack of transparency in the tariff adjustment calculations, calling the settlement inadequate.
- The proposed tariff increases were contested due to potential significant impacts on electricity prices for consumers.
- The court emphasised that public participation is necessary before finalising decisions impacting nationwide policy.
A South African court has rejected a 54 billion-rand ($3.2 billion) settlement between the country’s energy regulator and power utility Eskom over a tariff-calculation error, Moneyweb reported.
In September, Eskom acknowledged the mistake, which would have been passed on to consumers.
Judge criticises lack of explanation
The High Court in Pretoria issued the ruling on Sunday. Judge Jan Swanepoel said the parties had failed to explain how they calculated the figure, describing the proposed settlement as “little more than a thumb-suck,” according to News24.
The settlement, reached in July, came after Eskom challenged a January decision by the National Energy Regulator of South Africa (Nersa) regarding the scope of electricity price hikes starting April 1. Eskom had claimed it was entitled to an additional 107 billion rand in revenue.
While Nersa did not oppose the application, it entered into closed-door negotiations with Eskom in July and granted a price increase of 8.76% for the year starting April 1, up from the previously stated 5.36%.
The settlement would also have raised prices by 8.83% in the year beginning April 1, 2027, compared with an earlier figure of 6.19%.
The court ruled that settling without public participation violated policy and ordered the regulator to consult the public before making a final determination.
At 8.76%, the proposed increase would have far exceeded the central bank’s 2026 inflation forecast. The South African Reserve Bank now projects headline inflation to average 3.5% next year, noting that a lower tariff would support its goal of reaching a 3% inflation target by the third quarter of 2028.
