ORGANISED business in Nelson Mandela Bay has thrown its weight behind 13 high-energy users dragging the municipality, the Department of Energy and the National Energy Regulator of South Africa (Nersa) to court over steep electricity tariffs.
The 13 companies, which are among some of the Bay's biggest employers, are buckling under high electricity prices which they claim are 35% higher than they would be if they received electricity directly from Eskom.
They launched an application in the High Court in Pretoria two weeks ago
The companies are: Autocast SA, Borbet SA, Shatterprufe, Gillet Exhaust Technologie, Visteon SA, Coca-cola Fortune, Natstan Wire, Crown Chickens (Sovereign Foods), Weir Heavy Bay Foundry, S&N Rubber, Johnson Controls Automotive, CRH Africa and MW Wheels SA.
The Nelson Mandela Bay Business Chamber has joined the companies as the 14th applicant.
Business chamber chairman Kevin Hustler said: "For the first time, the Nelson Mandela Bay Business Chamber ventures into supportive litigation against Nersa, in the interest of protecting companies in our region from potential closure, the loss of jobs and resulting downward spiral of the Eastern Cape economy.
"As a co-applicant in the challenge against the manner in which municipal tariffs are set by Nersa, the Chamber joins the litigation to represent its membership against increasing electricity costs, for the benefit of the broader business community."
The companies owe the municipality about R100-million in electricity bills as some have refused to pay tariff increases since 2011.
In their court application, the companies claim that businesses outside the metro's boundaries pay Eskom direct tariffs of 68c/KWh , but the municipality charges 92c/KWh for the same service.
"It is fundamentally more expensive for an industrial electricity user to buy electricity from the municipality than to buy that same electricity from Eskom. There is no rational basis for such discrimination.
"There is no lawful basis for the extraction from the applicants of the Nersa tariff, an effective surcharge or tax, not least of all where the process and result are inherently irrational and arbitrary."
All electricity increases implemented by the municipality are regulated by Nersa.
The municipality purchases electricity directly from Eskom and adds a mark-up to be able to maintain municipal infrastructure and provide services for the city.
However, the companies felt that the 35% tariff hike over the past three years was making it impossible to stay afloat.
They also felt that no concession was given to high-energy users to receive special rates, and that by paying Eskom rates they would be able to preserve jobs.
Spokesman for the high-energy users group David Mertens said: "As companies we have really tried to engage with all levels of government regarding this matter, and this for about two and a half years now.
"High intensive energy users exposed to the high tariffs just keep suffering and reducing [staff numbers], with some of us closing [down].
"This litigation is not our preferred route of engagement but an outcome of a lack of response by both the municipality and Nersa.
"They have not shown any concern when it comes to preserving jobs and stimulating growth in key industries."
Mertens said: "The electricity cost to industry in Nelson Mandela Bay is among the highest in the world and has reached a tipping point. The more a business depends on energy, the more it will be affected.
"Municipal mark-ups on the Nersa tariff of up to 50% are a catastrophic reality for industry and business. Energy intensive users are already at a point where 950 jobs have been lost and investment has come to a grinding halt.
"The increase has considerable knock-on effects on the competitiveness, viability and sustainability of businesses, and the ability of industries to retain or even create jobs."
The municipality's acting head of electricity and energy, Peter Neilson, said the companies would end up paying more if they received electricity directly from Eskom because they would have to pay for the infrastructure to connect the electricity as well as a connection fee.
"When all of that is added, the tariff may be well over the metro's tariffs. They would have to pay for all the infrastructure to do the connection and that could go into hundreds of millions of rands," Neilson said.
"If we compare this with the five other metros, we are the second cheapest of all the metros with our electricity tariffs.
"These companies owe the municipality more than R100- million because they refuse to pay the tariff and this is detrimental to the running of the municipality's day-to-day services. A lot of the companies are still paying the 2010 tariffs, so they have not paid the three increases.
"If you want to make the city work, there's revenue required to do so and we need that money to provide services."