Friday, January 30, 2015

NERSA Consultation Paper: Municipal tariff guideline, benchmarks and proposed timelines for the municipal tariff approval process for the 2015/16 financial year

NERSA issued a consultation paper 18 November 2014 inviting comment on the “Municipal tariff guideline, benchmarks and proposed timelines for the municipal tariff approval process for the 2015/16 financial year” by 18 December 2014. It also convened a stakeholder workshop on 2 December 2014 to discuss aspects of the submission of D-Forms for the processing of municipal tariff applications as well as the proposed NERSA guidelines for tariff increases to be effective from July 2015. The term `workshop’ was a misnomer as apart from two presentations and a number of questions of clarification, no discussion on the paper was permitted with delegates requested to submit their comment in writing.

The paper advises that as a result of NERSA having granted an average increase of 12.69% for the 2015/16 financial year `after taking into consideration the Regulatory Clearing Account (RCA)’, the municipal bulk purchase tariffs from Eskom will increase by 14.24%. This, it reminds readers, is due to `the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA) time lag (i.e. municipalities’ implementation date is 01 July whereas Eskom's financial year starts on 01 April)’. Following its normal methodology, with a few minor changes in weighting of two its `cost line items’, NERSA arrived at a guideline increase of 12.20% for municipal tariffs with effect from 1 July 2015.

The NERSA decision on the municipal guideline increase is expected on 29 January 2015 which will then be communicated to municipalities. They have then been given until 15 March 2015 to submit their 2015/16 tariff applications including the NERSA approval process, possible public hearings and appeals. Meeting these deadlines is extremely unlikely and the AMEU has submitted comment questioning the application of the 15 March deadline for tariff approvals which NERSA contends is specified in terms of sections 43 (1) and (2) of the Municipal Finance Management Act (MFMA).

Copies of the consultation paper, NERSA presentations at the 2 December 2014 workshop and the AMEU comment on the guideline proposals are available on the AMEU website at http://www.ameu.co.za/LibraryReports/IndustryDocuments.aspx#5258211-nersa.
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