Legally, SA's energy regulator, Nersa, is obliged to approve annual electricity increases, but the method that the regulator uses to do this 'does not comply with legislation', an advocate for two business chambers argues.

Two business chambers have asked the Gqeberha High Court to set aside the methodology followed by the National Energy Regulator of SA (Nersa) in fixing annual electricity price increases.

The application has been brought by the Nelson Mandela Bay Business Chamber and the Pietermaritzburg and Midlands Chamber of Business against Eskom, Nersa and the City of Johannesburg.

Advocate Matthew Chaskalson SC, for Eskom, said his client was more of a "surrogate applicant" as it supported the application by the two business chambers.

Advocate Andrew Breitenbach SC said their argument is that Nersa does not consider the cost of supplying electricity or the efficiencies or inefficiencies in the municipal supply structures. Instead, Nersa based its guidelines for tariff increases on averages and norms "regardless of actual costs".

Breitenbach said that legally, Nersa is obliged to approve annual electricity increases, but the method that the regulator uses to do this "does not comply with legislation".

He said that by law municipalities can include a recovery of the cost...