NMBBC to support High Energy Users in litigation against NERSA MyZA

The Nelson Mandela Bay Business Chamber has been extensively involved with the six of the thirteen companies that make up the High Energy User group through meetings, debates, correspondence and engagements with the Nelson Mandela Bay Municipality and the National Energy Regulator of South Africa (NERSA).

For the first time, the Nelson Mandela Bay Business Chamber will venture into supportive litigation against NERSA, in the interest of protecting companies in our region from potential closure, the loss of jobs and resulting downward spiral of the Eastern Cape economy.

As a co-applicant in the challenge against the manner in which Municipal tariffs are set by NERSA, the Chamber joins the litigation to represent its membership against increasing electricity costs, for the benefit of the broader business community.

The litigants maintain the following:

That NERSA has no constitutional power to impose a surcharge indirectly, or on behalf of any Municipality;
In approving the relevant electricity tariffs, NERSA did not consider relevant information, and did not apply its mind
That business in Nelson Mandela Bay pays unjustifiably higher rates for electricity compared to business that fall outside of the Nelson Mandela Bay licenced area;
That no concession is granted to industrial electricity users within the Nelson Mandela Bay Municipality licenced area;
That the imposition of the Nelson Mandela Bay Municipal tariff did not comply with various legislative requirements, and is in violation of constitutional rights.

The future and imminent impact of the tariff increases will require:

Industries to recover the costs through increasing product and commodity pricing, resulting in the consumer paying more (over and above their home electricity bill), increasing the general cost of living;
Certain industries to consider foreclosure or relocation to alternate provinces

Current and projected electricity tariffs have a significant adverse economic impact on the continued survival of the manufacturing industry and commercial sector in this region.

The electricity cost to industry in Nelson Mandela Bay is amongst the highest in the world and has reached a tipping point. The more a business depends on energy, the more it will be affected. Municipal Mark-ups on the NERSA tariff of up to 50% are a catastrophic reality for industry and business. Energy Intensive Users are already at a point where 950 jobs have been lost and investment has come to a grinding halt. The increase has considerable knock-on effects on the competitiveness, viability and sustainability of businesses, and the ability of industries to retain or even create jobs.

We need an electricity price path which will ensure that South African business remains financially viable and creates investment opportunities which attract investors, rather than deter them. One of these catalysts is to provide a sustainable utility, with good quality of supply that remains affordable for all South Africans.