The National Energy Regulator of South Africa, Nersa, has admitted in the High Court in Pretoria that electricity tariffs it approved for 5 municipalities for the 2025/26 financial year were unlawful. The affected areas are the Johannesburg, Ekurhuleni and Nelson Mandela Bay metros, and the Emfuleni and Madibeng local municipalities.

Nersa conceded that the tariffs were based on calculations with errors, and that it approved them without properly checking the figures the municipalities submitted. Households and businesses in those areas could now be owed refunds.

The scale of the problem came out in court on 9 November, when it emerged that businesses in Nelson Mandela Bay had been charged 76% more for electricity than it cost the municipality to supply it. The court must now decide how affected customers will be compensated and how the tariffs will be corrected.

The parties disagree on who should benefit. Packaging company Mpact, one of the businesses challenging the tariffs, proposed limiting any adjustments at first to the parties in the case. Nersa argued that this would be unfair to everyone else who paid the unlawful tariffs, and that corrections should apply to all electricity customers in the affected municipalities.

It also asked the court to let municipalities phase the corrections in over several years, as was done with Eskom's tariffs, to avoid a financial shock. Ekurhuleni, which has strongly opposed the challenges, argued it could not afford to refund customers.

The cases follow years of pressure from business chambers. The Pietermaritzburg and Midlands Chamber of Business and the Nelson Mandela Bay Business Chamber went to court to force municipalities to produce cost-of-supply studies, which show what it actually costs to run their electricity businesses, and are used to set tariffs.

BusinessTech reported Nersa's admission and the arguments in court. Melanie Veness, chief executive of the Pietermaritzburg and Midlands Chamber of Business, told The Money Show that customers who overpaid must get credits on their accounts.

"You pay the excessive charges; the municipalities don't spend the money on the electricity functions, so you've got failing infrastructure and the costs associated with that," she said. Her chamber has lodged formal disputes on affected members' accounts, and says cutting their power while those disputes are unresolved would be unlawful.

The most important part of this case is not the refund itself, which may take years to arrive, but what it proves: the price a municipality charges for electricity is not fixed by nature, and it can be wrong. Many municipalities rely on electricity sales to fund other services, while spending too little on the network itself, and business chambers have now shown in court that the numbers behind the tariffs can be tested.

For households and businesses in the 5 affected areas, the practical steps are to keep paying while the court decides, keep records of your bills, and follow guidance from your local business chamber or ratepayers' association. Withholding payment without a formal dispute in place can lead to disconnection, so get advice before you do.

The case also adds to a familiar picture of municipal electricity under strain, from City Power losing billions a year in Johannesburg to Eskom ruling out price cuts. This is not legal advice.

You might also like our piece on Eskom's falling electricity sales, the cost of SA's elections, and Sassa grant numbers.

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