1.1. The National Energy Regulator of South Africa (NERSA) is the regulatory
authority of the energy sector in South Africa and its mandate includes the
regulation of the electricity supply industry. In terms of section 4(ii) of the
Electricity Regulation Act, 2006 (Act No. 4 of 2006) (‘the Electricity Regulation Act’), the Energy Regulator must regulate electricity prices and tariffs.

1.2. The Energy Regulator, on an annual basis, approves a percentage guideline
increase and reviews the municipal tariff benchmarks. The guideline increase
assists the municipalities in the preparation of their budgets, while the revised
benchmarks are used in the evaluation of the municipal tariff applications.

1.3. On 7 March 2019, the Energy Regulator made a determination on Eskom’s
fourth Multi-Year Price Determination (MYPD4) and the Regulatory Clearing
Account (RCA) application for Year 5 (2017/18) of the MYPD3. Moreover,
Eskom’s application to the High Court for an urgent implementation of a revised price increase with effect from 1 April 2020 was unsuccessful. As a result, the Energy Regulator subsequently approved Eskom’s Retail Tariff Structural Adjustments (ERTSA) on 12 March 2020.

1.4. The municipal tariff guideline increase is developed based on Eskom’s
approved bulk price increase of electricity to municipalities and the increase in
the municipalities’ cost structures. Hence, the approval of the municipal
guideline increase is subsequent to the determination of the ERTSA. The
benchmarks are developed to ensure that tariffs across municipalities are not
vastly different.

1.5. The Energy Regulator is requesting that stakeholders comment on the
percentage guideline increase, the benchmarks, the proposed timelines and the specific issues raised, as set out in this consultation paper. The comments
should be addressed to: Mr Thabo Tshabalala at The National Energy
Regulator of South Africa, Kulawula House, 526 Madiba Street, Arcadia,
Pretoria or emailed to: municguideline@nersa.org.za. The deadline for the
submission of comments is 9 April 2020.

1.6. NERSA will hold a public hearing (tentative) on the key issues highlighted in the consultation paper on 16 April 2020, in line with the terms of section 4(3) of the Promotion to Administration Justice Act, 2000 (Act No. 3 of 2000).