Lobby group AfriForum said on Friday that it will consult with its legal team about the constitutionality of the National Energy Regulator of South Africa’s (Nersa’s) behind-closed-doors settlement with State-owned entity Eskom.

The settlement agreement relates to errors made by the regulator in its sixth multiyear price determination (MYPD6) revenue decision, which was revealed by online publication Moneyweb.

Eskom legally challenged the MYPD6 decision in July, arguing that the erroneous way in which Nersa calculated the regulatory asset base value for the generation business, and which affected the depreciation amount approved, had left it with a revenue shortfall of R107-billion.

In a statement, Nersa said that its own review of the decision identified errors that resulted in an underestimation in certain components of Eskom’s application – specifically an error on the depreciation amount captured – that had resulted in a shortfall of R14.5-billion.

As a result of the settlement, Eskom’s electricity tariffs are poised to rise by 8.76% on April 1 next year instead of the 5.36% approved previously, and by 8.83% instead of 6.19% in 2027/28.

AfriForum is arguing that the secret settlement may undermine transparency, accountability and consumer protection.

AfriForum manager of local government affairs Morné Mostert accused Nersa of “gross negligence” by withholding information relating to the settlement.

“Nersa itself admits to the billions of rand worth of errors in its revenue calculations. By concluding a secret settlement with Eskom instead of subjecting the matter to full transparency and public participation, Nersa has acted in a way that may be unconstitutional and unlawful. Consumers should not carry the burden of the regulator’s mistakes,” said Mostert.