Appointment of acting electricity regulator questioned

Nomfundo Maseti has been reappointed acting electricity regulator board member at the National Energy Regulator of South Africa (Nersa) with effect from March 1, after her previous term expired on February 28.

This is the second 12-month term by Maseti, and the third consecutive appointment of an acting electricity regulator board member at Nersa following the departure of Thembani Bukula in the full-time role in 2017.

Maseti is also serving her second five-year term as full-time piped-gas regulator board member at Nersa.

Her appointment for a second term as acting electricity regulator appears to contradict the National Energy Regulator Act of 2004 (Act No 40 of 2004), which states:

· Section 5(6)(d): If a vacancy occurs on the energy regulator the minister may fill the vacancy temporarily for a period of not more than 12 months by appointing a person without complying with Section 6(7).

· Section 6(7): Before appointing members to the energy regulator, the minister must by notice in the Gazette call for nominations from members of the public.

In addition to her appointment for a second term, the appointment was made without any notice in the Government Gazette calling for nominations from members of the public.

Nersa advised against the move

Sources indicate that Nersa advised energy minister Jeff Radebe against the reappointment of Maseti on the above legal grounds, and on grounds that such appointment, and any decisions made by the acting electricity board member, could be challenged in law.

At the time of writing, neither Nersa nor the department of energy had responded to questions from EE Publishers regarding Maseti’s reappointment.

The questionable reappointment comes as Nersa faces two definite legal challenges by Eskom, as well as the likelihood of still further legal challenges by the utility.

The first is in respect of Nersa’s revenue determination (the annual average electricity price increase allowed by Nersa) for Eskom’s 2018/19 financial year ending March 31. Eskom applied for a revenue increase of 19.9% but was only granted a 5.23% increase, commencing April 1, 2018.

The second legal challenge is in respect of Nersa’s 2014/15, 2015/16 and 2016/17 regulatory clearing account (RCA) liquidation determination. Eskom applied to claw back some R66.6 billion from customers via the electricity tariff, but Nersa only allowed it to claw back R32.69 billion, through a tariff increase of 4.4% applied over four years commencing April 1.

More legal challenges likely

The regulator’s legal challenges are set to mount further as Eskom awaits written reasons for Nersa’s recent determinations announced on March 7. These include Nersa’s revenue determination for the three-year MYPD4 period (Eskom’s 2019/20, 2020/21 and 2021/22 financial years), as well as its RCA liquidation determination for Eskom’s 2017/18 financial year. 

Eskom applied for a revenue increase of 15% a year for the MYPD4 period, but was only granted increases of 9.41%, 8.15% and 5.2% respectively for the next three years commencing April 1. In addition, for its 2017/18 financial year, Eskom applied to claw back some R21.6 billion from customers via the electricity tariff, but Nersa only allowed R3.86 billion.

Depending on the written reasons given by Nersa for its MYPD4 and RCA determinations of March 7, Eskom may challenge these in court as well.

Eskom has already indicated its disagreement with the way in which the regulator has treated the R23 billion per year bailout in the MYPD4 period announced by finance minister Tito Mboweni in his budget speech in February.

All these legal challenges, as well as those still envisaged, are expected to take several years to be resolved in court and are likely to have a seriously debilitating effect on the work of the regulator.

Chris Yelland is investigative editor at EE Publishers.