- The High Court has set aside Nersa’s decision on Eskom’s tariffs for 2025–2028, citing serious calculation errors and unlawful process.
- A proposed R54 billion settlement between Eskom and Nersa was rejected because it excluded public consultation and sought to evade scrutiny.
- The matter is remitted to Nersa, which must reopen public submissions before making a fresh determination on Eskom’s revenue.
A miscalculation of R107 billion in Eskom’s application for the latest tariff period has led to a scathing judgment against the National Energy Regulator of South Africa (Nersa).
The High Court in Pretoria has set aside Nersa’s entire tariff decision for 2025/26 to 2027/28. In his ruling on 21 December 2025, Judge Norman Swanepoel found that Nersa’s approval of Eskom’s allowable revenue under the Multi-Year Price Determination 6 process was unlawful, irrational and inconsistent with its legal obligations.
The court described the dispute as arising from “a calculation error of R107 billion, or perhaps less, made by Nersa in determining the 2025/2026, 2026/2027 and 2027/2028 electricity tariffs”. This error affected Eskom’s generation revenue so fundamentally that it could not be corrected privately.
Eskom requested that the court review and set aside Nersa’s decision, alleging that the regulator had understated its revenue by more than R107 billion. Nersa conceded that its decision was flawed, admitting mistakes in its calculations and misapplying the methodology for asset depreciation and the regulatory asset base.
Why the court rejected the Eskom–Nersa settlement
Instead of letting the court decide on a remedy, Eskom and Nersa tried to settle the dispute by agreeing on an extra R54 billion in allowable revenue for Eskom over several years. This deal, however, became a central issue in the case.
Afriforum and the Minerals Council South Africa intervened, warning that the settlement would lead to sharp tariff increases with no public participation. Judge Swanepoel agreed, finding that the process breached the transparency and fairness required by South African law.
“The notion that this was a matter to be settled between two litigants ignores the broader picture,” Judge Swanepoel said. “The settlement has an impact on every electricity consumer in South Africa.”
He dismissed the idea that public consultation would have been “fruitless”, emphasising that public participation is mandatory for tariff decisions. The court reaffirmed that “electricity tariff increases affect all South Africans” and that statutory safeguards must be respected.
Secret decisions condemned
The court was especially critical of Nersa’s reasoning for settling. Nersa admitted that one benefit of the compromise was avoiding scrutiny in open court.
Judge Swanepoel quoted Nersa’s rationale directly, noting its admission that settlement “does not enable the ventilation of the details in open court, which can expose Nersa further”. He ruled that this motivation tainted the agreement and made it contrary to public policy.
“Decisions made in secret and without public knowledge is anathema to the statutory framework, and to our constitutional norms,” the court found. Even if correcting an error was a valid aim, the existence of a hidden motive could not be overlooked.
The judge also doubted the basis for the R54 billion figure. “There is no explanation how this figure was arrived at, save to say that it was a compromise,” he said, describing the amount as “a thumb-suck”.
Remittal and public participation required
The court confirmed that Nersa’s tariff decision constituted administrative action and could be reviewed under the Promotion of Administrative Justice Act. However, it refused to substitute its own decision for Nersa’s, instead ordering the regulator to make a new, lawful and transparent decision.
“I am unable to grant a substitution order,” Judge Swanepoel said, explaining that the court and parties lacked the information to determine Eskom’s correct regulatory asset base. What was clear, though, was that any new decision must follow public input.
With the next tariff cycle approaching, the court directed that a limited period be opened for written submissions on the recalculation of Eskom’s regulatory asset base and depreciation costs.
What this means for electricity users
The court’s order preserves the tariffs already imposed for 2025/26, so there will be no immediate change. However, the Eskom–Nersa tariff decision for later years has been set aside, forcing the regulator to start again and include public input.
In a pointed conclusion, the court ordered Eskom and Nersa to pay the legal costs of Afriforum and the Minerals Council, recognising that both intervening parties had been “substantially successful”.
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