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Speaker 1: Court ruling overnight in which a judge ordered the energy

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Speaker 1: regulator Nurser to recalculate the electricity prices that you pay

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Speaker 1: in joe Burg, Ekroleni, Mauddi, BEng and Umsunduzi after several

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Speaker 1: businesses and one business group said the tariffs were discriminating

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Speaker 1: against them. So what that means is it is possible

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Speaker 1: that once the tariffs have been recalculated, households who've already

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Speaker 1: paid too little for their electricity might have to pay

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Speaker 1: more to make up the difference. Some of the companies

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Speaker 1: would have paid too much, they might have to be

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Speaker 1: reimbursed in some way. Melanie Vaness is the CEO of

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Speaker 1: the Peter Merritzburg and Midland's Chamber of Business. They were

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Speaker 1: involved in this court action on behalf of enterprises and

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Speaker 1: businesses in the Msndouzi area. They went against the Umsunduzi municipality. Melanie,

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Speaker 1: good evening, Thanks for your time. Why did you bring

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Speaker 1: this application? What was happening to your members that you

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Speaker 1: thought was unfair?

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Speaker 2: Well several years ago. In fact, in twenty twenty two,

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Speaker 2: we supported some court action against the regulator to challenge

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Speaker 2: the methodology that they're employed to determine municipal tariffs because

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Speaker 2: by law, municipalities are permitted to recover the efficiently incurred

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Speaker 2: cost of supply and a small return on assets, and

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Speaker 2: it has to be calculated per customer category. So municipalities

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Speaker 2: have to submit that cost of supply to get an increase,

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Speaker 2: and in our case, our municipality were granted a fifteen

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Speaker 2: percent increase across tariff categories without having looked at the

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Speaker 2: real data per category. And in our case, industrial members

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Speaker 2: appear to be subsidizing other tariff categories, and so that

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Speaker 2: is basically it's both unfair and bad for our economy

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Speaker 2: because there are big employers and that's just not acceptable.

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Speaker 2: Economy can't go and our manufacturers can't compete if they're

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Speaker 2: not getting a secure quality supply of electricity at a

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Speaker 2: competitive rate.

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Speaker 1: So the cost of supply issue is something that I

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Speaker 1: think is sort of in a way you've been ruled upon,

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Speaker 1: perhaps in your case earlier, because it came it is

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Speaker 1: true that municipalities had not been submitting that nurse had

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Speaker 1: not been considering that, But at the same time, did

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Speaker 1: nursa consult you, because isn't that something they're also supposed

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Speaker 1: to do? So did they make it clear to your

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Speaker 1: members they would be paying more than other people for

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Speaker 1: their power?

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Speaker 2: No, absolutely not. There is a consultation process both with

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Speaker 2: the municipality. When they determined draft tariffs, we asked for

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Speaker 2: them to share the cost of supply with us, and

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Speaker 2: they refused. We then asked the Energy Regulator, and they're

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Speaker 2: also compelled to consult with us, to share the municipality's

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Speaker 2: cost of supply study so we could engage meaningfully on it,

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Speaker 2: and they too refused, And so they determined the tariff

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Speaker 2: in the absence of making that information available. So we

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Speaker 2: really have no choice but to take this action.

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Speaker 1: What's your understanding of what happens now? The tariffs will

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Speaker 1: have to be recalculated. I presume the municipalities would have

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Speaker 1: to include a cost of supply. I have to say, Melanie,

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Speaker 1: and I'm sorry to say this, I don't know if

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Speaker 1: all of the municipalities will actually be able to do that.

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Speaker 2: No, so, in our case, our municipality did submit a

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Speaker 2: cost of supply study. Unfortunately, in our view, it was

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Speaker 2: a flawed coster supply. They've got ten days from the

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Speaker 2: order made by the court to submit resubmit their application.

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Speaker 2: I would imagine that they are not going to find

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Speaker 2: much joy unless the review the cost of supply study

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Speaker 2: and put an amended one in that looks at every

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Speaker 2: customer category and then makes the application on that basis.

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Speaker 2: We'll then have the opportunity to interrogate their cost of

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Speaker 2: supply and to make our comments and run a proper process.

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Speaker 2: How it's exactly what should have happened when the tariffs

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Speaker 2: were first proposed and considered Banosa.

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Speaker 1: There's still a few things that have to happen here.

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Speaker 1: But is it possible that households that ended up with

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Speaker 1: lower with paying less relictacy than they should have because

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Speaker 1: you were paying more, that somehow that money might have

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Speaker 1: to be made up.

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Speaker 2: Look, I think that it's going to be very very

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Speaker 2: important for all sectors of society to engage with this

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Speaker 2: cost of supply. If you look at the municipality's domestic tariffs,

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Speaker 2: they are much higher than the domestic tariffs of ESCAM

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Speaker 2: and essentially they're supplying, they're giving the same service. So

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Speaker 2: I can't see how the current tariffs that they're paying

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Speaker 2: won't be sufficient to cover the cost for their category.

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Speaker 2: So it will be important for all sectors of society

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Speaker 2: to engage with that cost of supply and to ensure

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Speaker 2: that we get fair cost reflective tariffs in every customer category.

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Speaker 1: Melanie Vaness, thank you so much, Seero of the Peter

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Speaker 1: Marrisburg and Midland's Chamber of Comments listening to that. Matthew Cruz,

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Speaker 1: the energy expert at in Oh, Matthew, good evening. I mean,

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Speaker 1: once again nurser has egg on its face. It must

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Speaker 1: be losing credibility as a regulator.

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Speaker 3: Hello, good evening, and thanks for having me so. Yes,

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Speaker 3: unfortunately this is the case. Now there's this is now

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Speaker 3: following the mistakes that they made, the fifty four billion

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Speaker 3: round mistake that was agreed with ESCOMB and now it's

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Speaker 3: that's back in the High Court as well. So there's

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Speaker 3: a lot of egg goering on this is face and

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Speaker 3: this is we shouldn't forget that. This is actually something

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Speaker 3: that occurs pretty much every single time that there's a

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Speaker 3: multi year price determination from es COM where they ask

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Speaker 3: for like a ridiculous fifty percent increase or last time

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Speaker 3: thirty six per increase, and then this he says, no, no,

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Speaker 3: you're not going to get that increase. You going to

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Speaker 3: get a lower one. Don't worry public it's going to

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Speaker 3: be initially short term pain for long term gain. The

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Speaker 3: first year is going to be only half of what

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Speaker 3: COM applied for in our case last year twelve point

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Speaker 3: seven four percent increase, but then this year we were

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Speaker 3: hoping to get a five point six percent increase, but

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Speaker 3: now it looks like it might be even a ten

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Speaker 3: point five percent increase. So this is unfortunate that nurses

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Speaker 3: going to this situation at a time when they we

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Speaker 3: would hope that they would be showing a lot of

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Speaker 3: competence and excellence in the space because they need to

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Speaker 3: be playing a key role in the unbundling of es

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Speaker 3: COM to ensure that that efficient cost of supply that

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Speaker 3: was mentioned is actually correct and being awarded without ESCOM

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Speaker 3: as a term at receiving undue compensations. So I've got

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Speaker 3: a big problem with the whole way that this cost

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Speaker 3: of supplies approached because if you think about it, if

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Speaker 3: you were a company and you're told, oh, no, you

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Speaker 3: can replenish any cost that you have with a small margin,

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Speaker 3: you would just inflect your costs and find ways of

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Speaker 3: reflecting more costs. And this has been senior es COM

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Speaker 3: and from my time at ESCOM and understanding how it

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Speaker 3: goes with versipalities. They unfortunately view the revenue collected from

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Speaker 3: electricity as revenue that they can spend on anything. So

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Speaker 3: they use it for wad infrastructure, They use it for

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Speaker 3: their homes, their houses and their cars, things like that.

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Speaker 3: The fruitless and waste wasteful expenditure that we hear about,

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Speaker 3: it's the revenue from electricity. So then if that's the case,

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Speaker 3: are they really providing the Are they really accounting for

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Speaker 3: the costs that they're using to supply electricity? I don't

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Speaker 3: think so. So I'm hoping for a whole review of

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Speaker 3: the way that the cost lit justity is actually determined

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Speaker 3: into Africa.

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Speaker 1: Well, I was going to say, I mean, if ever

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Speaker 1: there was a moment for a sort of big bang

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Speaker 1: reform approach, something that really changes, this would be now.

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Speaker 1: The system is kind of creaking and the electricity environments

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Speaker 1: has changed so much in the last ten years. I

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Speaker 1: know there's a review of the tariff structure. I think

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Speaker 1: SNADI is in charge of that. That'll take some time.

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Speaker 1: What people rarely want, of course, is cheaper power m.

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Speaker 3: Yes, that's been on the cards for the last ten

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Speaker 3: years for the government. Saying that oh, all the screen

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Speaker 3: electricity is coming online, is going to bring down the costoltictricity.

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Speaker 3: But that's not actually been a reality. So what is

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Speaker 3: exciting is that when this unbundled state of es COM

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Speaker 3: finally comes into fruition and we have a democratized inter sector,

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Speaker 3: it won't be within s COM's ability to be like, oh,

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Speaker 3: this is now the prismaticity for everyone. They will be

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Speaker 3: bidder in the markets, no longer a determiner of the

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Speaker 3: costs of electricity. So what will happen is the other

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Speaker 3: independent power producers that I'm able to provide electricity from

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Speaker 3: solar farms pedal batteries and wind farms pedal batteries that

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Speaker 3: electricity typically costs half of what s come's currently charging.

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Speaker 3: They will bid the electricity on the markets, and then

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Speaker 3: all of the less expensive renewal energy will be prejuiced first,

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Speaker 3: and then ESCOM will be able to receive their price,

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Speaker 3: So that'll start driving down the price Writesity, but I

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Speaker 3: see that only happening about three to five years unfortunately.

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Speaker 1: Matthew Cruz, thank you, Energy expert at m part