Pretoria - Eskom's 34% interim price increase application is unlawful, the Nelson Mandela Bay municipality said on Monday.
The municipality and its Cape Town counterpart called on the National Energy Regulator of South Africa to reject Eskom's application.
"Eskom's application undermines legislation. Nersa is a statutory body making an administrative decision.
"Nersa does not have the power to overlook non-compliance [with legislation]. If it [legislation] is not complied with, the application must be rejected.
"Any decision based on that extent of unlawfulness would be capable of being set aside," said advocate Graham Richards, of the Nelson Mandela Bay Municipality.
He was speaking at Nersa's public hearings into Eskom's price hike application at the CSIR convention centre in Pretoria.
He said if Nersa granted the application, it would place municipalities "directly in the line of fire" due to the non-compliance with legislation.
Eskom should have applied for the increase by March 15, the legislated deadline, but failed to meet the deadline.
This, coupled with the lack of information to justify the increase, as required by law, should be grounds for Nersa to reject the application, he said.
"[The application] does not address revenue requirements nor peremptory requirements, nor does it disclose its finances.
"You [Nersa] do not have enough information in front of you to form a view," Richards said.
Councillor Clive Justus, from the City of Cape Town, also felt the parastatal's application was not supported by sufficient motivation for the price hike.
He concurred that the application failed to comply with local government legislation.
"Eskom's proposal compromises local government budgetary processes. Its submission on multi-year price determination lacks total transparency on the real costs of generating electricity," Justus said.
The Energy Intensive User Group (EIUG) also called for an audit into the costs, such as liquid fuel costs, incurred by Eskom, describing them as "extremely high".
"I think a third party review of these costs is needed because they are so high," the EIUG's Ian Langridge said after his presentation.
Justus called on Nersa to grant only an inflation-linked tariff hike, while Richards requested that no tariff at all be granted.
"Nersa's timeframe for a decision accordingly fails to take into account that municipalities are obliged to table their budgets for adoption prior to the end of May.
"Councils are forced to consider budgets containing tariffs not based on Nersa's ruling in this application," said Richards.
Earlier, the Institute of Municipal Finance Officers (IMFO) said local government was prepared for the interim electricity tariff hike of 34%.
In an oral presentation on the parastatal's price increase application to Nersa, Louise Muller, from the IMFO, said the National Treasury had alerted municipalities to the possibility of the increase.
"If there is a decision to award the 34%, municipalities have already made a nominal 34% adjustment, the National Treasury had advised us on that," Muller said.
However, she added that the parastatal had not complied with the legislative frameworks adhered to by local government in its application.
- Sapa