Setback for bid to stop new power tariffs

RELEBOHILE TSOAMOTSE

MASERU – The Advocates for Supremacy of the Constitution’s attempt to interdict Lesotho Electricity Company’s (LEC) implementation of new electricity tariffs has failed. Consumers are already being charged the revised tariffs, pending a decision from the court on a case brought forth by the association seeking the cancellation of the adjusted fees. The application was presented before High Court Justice Realeboha Mathaba this week, with parties granted until April 12 to file and exchange papers for the case to proceed.

Lawyers representing the association were compelled to withdraw their request for the new tariffs to be put on hold until the court’s decision, citing that the tariffs are already in effect. The specific date for the hearing remains undetermined, awaiting the readiness of all necessary documents and court records. In the interim, consumers will continue to be billed according to the adjusted tariffs when purchasing electricity, until a verdict is reached in the case.

During the brief proceedings before Justice Mathaba, it was revealed that the complainants had not met the requirements for an urgent application. However, due to the national significance of the matter, both parties agreed for the case to be treated as urgent. The 9.6 percent tariff hike announced by Lesotho Electricity and Water Authority (LEWA) last month came into effect this week, prompting Advocates for Supremacy of the Constitution, commonly known as Section 2, to seek a review of the new electricity tariffs from the commercial division of the High Court.

Section 2 contends that LEWA and its board must be compelled to conduct a comprehensive consultation process with the public and all relevant stakeholders before implementing the new tariffs. They argue that this process should adhere strictly to the principles of openness, transparency, and accountability as outlined in the Lesotho Electricity Authority Regulations of 2009.

The association warns that the increased rates will burden households and businesses with higher monthly bills, exacerbating financial strain, particularly for those with limited incomes or operating on narrow profit margins. Furthermore, they predict that businesses will pass on these increased costs to consumers through higher prices for goods and services, compounding the economic impact on the population.

Seeking immediate relief, the association urges the court to order LEWA and its board to stop the implementation of the new tariffs until they can produce their latest audited financial statements. These statements, they argue, are crucial for assessing the rationale behind the proposed tariffs. However, Section 2 alleges that instead of providing financials for the year ending in 2023, LEWA furnished statements only up to March 31st, 2022.

In their court documents, Section 2 contends that the absence of the latest financial statements indicates a failure to adhere to the tariff filing and review procedure. They assert that “the accurate determination of the cost of sales necessitates recourse to the audited financial statements for the antecedent year.”

According to Section 2, LEC’s failure to provide its latest audited financial statements would not only hinder the association but also deprive the public and other stakeholders of the opportunity to make meaningful contributions to the tariff review process.

The association argues that audited financial statements are essential for evaluating the reasoning behind any proposed tariff increases.They reference Section 94(1)(2) of the Companies Act, 2011, which mandates boards to complete and endorse a company’s financial accounts within three months after the conclusion of each financial year.

Additionally, the Act requires that within six months following the conclusion of each financial year, a company’s accounts must undergo an audit. However, Section 2 contends that despite the audit deadline passing, LEC did not possess its latest financial statements at the time of their tariff application.

“At the time of the first applicant’s submission on February 2, 2024, the deadline for LEC to conduct an audit of its financial statements as stipulated by the Companies Act had considerably elapsed,” the association states. “We therefore reasonably believed that the 4th respondent possessed audited financial statements for the fiscal year ending March 31, 2023, and presumed, based on logical inference, that they would be capable of furnishing these statements upon request by the electricity authority.”

Section 2 expresses dismay at LEWA’s endorsement of the new tariffs on March 20, 2024, despite the absence of the required financial statements. They argue that LEWA’s approval lacks a rational basis and constitutes a significant breach of procedural fairness and natural justice.

“The lack of transparency in the tariff-setting process undermines consumers’ entitlements, including the right to be heard and to participate in decisions affecting their welfare,” the association asserts.

Furthermore, they criticise the arbitrary approval of increased electricity tariffs without addressing concerns raised by them and other stakeholders, viewing it as a failure on the part of the electricity authority to fulfil its statutory obligation of regulating the electricity sector in the best interest of consumers. The association’s president, Kananelo Boloetse, has submitted an affidavit emphasising the importance of transparently considering any changes to electricity tariffs, taking into account the potential impact on customers’ financial well-being.