06 Sep THE SECRET AGREEMENT BETWEEN NERSA AND ESKOM – REVIEWABLE?
I was interviewed this week on the highly controversial agreement between NERSA and Eskom pursuant to litigation. NERSA disclosed that it reached an out-of court settlement with Eskom on 30 July 2025 to correct errors in NERSA’s MYPD6 revenue decision. The correction gives Eskom an additional R54 billion recoverable in 2026/27 and 2027/28 (with balance in the next cycle), increasing the tariff path to roughly ~8.8%in each of those two years (up from prior 5.36% and 6.19%). NERSA says it did not run the usual public-participation process because the matter sat within a judicial-review context. The deal still needs to be made an order of court to be effective. Several stakeholders (EIUG, SAFTU, OUTA, AfriForum) have publicly indicated opposition and/or steps to intervene or review.
Generally, Courts are loath to intervene in private settlement agreements with the Courts repeatedly cautioning Judges not to descend into the arena. However, the agreement must be lawful, serve a legitimate purpose and not offend public policy. Hence, the Court may find that the settlement agreement cannot be made an Order and stands to be set aside if it is found that the settlement agreement offends the provisions of the Constitution, is ultra vires for contravening inter alia the provisions and object of the Electricity Regulation Act (ERA). One of the main aims of the ERA is to achieve sustainable and efficient provision of energy for consumers. It could be argued that the secret settlement agreement offends this object. Other lines of argument is that that settlement agreement to the exclusion of participation of stakeholders is also reviewable on the basis that such participation is mandatory.
There is widespread public perception that Eskom is attempting to shift historic maladministration, mismanagement costs onto the public. The public is increasingly fatigued by parastatals and Organs of State recovering costs from the man on the street for historic wasteful and fruitless expenditure. This matter raises important issues of private contractual settlement between litigants, when the litigants are State enterprises.