Msunduzi rejects criticism as tensions rise over electricity tariff methodology

Tensions are rising between Msunduzi Municipality and key business stakeholders over the municipality’s Cost of Supply (COS) Study, which underpins its 9,26% electricity tariff increase application to the National Energy Regulator of South Africa (Nersa) for the 2026/27 financial year.

The strain surfaced during a closed-door council meeting on Wednesday, where councillors discussed the COS study following scrutiny of the municipality’s tariff application.

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Nersa’s review was informed, in part, by written submissions from the Pietermaritzburg and Midlands Chamber of Business, which challenged the credibility of the study and argued that it contained serious flaws.

The disagreement has sharpened concerns about the municipality’s relationship with business and civic stakeholders, particularly as questions continue over the methodology used to justify the proposed tariff increase.

However, Msunduzi Municipality rejected claims that Nersa had raised serious concerns about the Cost of Supply Study, saying the regulator considered its submission and subsequently approved its electricity tariffs.

Municipal spokesperson Ntobeko Mkhize said the municipality could not comment in detail on matters discussed under confidential council items while they remained subject to internal processes.

According to Mkhize, municipal officials maintained professional relationships with stakeholders and remained committed to engaging constructively on tariff-related matters.

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She said the municipality was concerned that confidential council discussions had been selectively leaked, creating what she described as a misleading impression of a regulatory process that had already been concluded through the appropriate channels.

The chamber’s input on Msunduzi Municipality’s tariff application identified several material errors and called for the entire COS study to be rejected.

Chief executive Melanie Veness said: “Numerous adjustments are required in the study, but more than that, given the seriousness of the errors, the quality of the COS study must be deemed unacceptable.

Since these material errors are encountered in the COS study provided for the purpose of the Msunduzi 2026/27 tariff determination, the COS study, as presented, cannot form the basis of a tariff determination, and it is our strong view that Nersa should reject it in its entirety.

The Msunduzi Association of Residents Ratepayers and Civics said further tariff increases would be unlawful.

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Chief executive Anthony Waldhausen said their submissions to Nersa were clear: in light of the city’s audited losses, over-procurement of electricity, suppressed prepaid sales, ongoing electricity theft and unequal supply arrangements, further tariff increases would be unlawful, inequitable and counter-productive.

Msunduzi Municipality must demonstrate verified reduction in electricity losses, corrected bulk procurement from Eskom aligned to actual sales and improved prepaid electricity sales performance, among other things.

“It should display active enforcement against electricity theft, a credible, loss-adjusted Cost-of-Supply study and a funded electricity loss-reduction plan,” said Waldhausen.