No let up to Section 2, LEC legal tussle
RELEBOHILE TSOAMOTSE
MASERU – ‘Muela Hydro power station’s planned maintenance has contributed to the hike in electricity charges for consumers. The hydro power station’s anticipated 300 percent tariff increase has led to the Lesotho Electricity Company (LEC) resolving that consumers will cover the cost.
LEC’s Managing Director, Mohlomo Seitlheko says the company’s electricity tariff application and subsequent approval by the Lesotho Water and Electricity Authority (LEWA) was driven mainly by the cost of bulk power supply which, in turn, is influenced by the increase of imported electricity.
“This is further exacerbated by the anticipated 300 percent tariff increase by the Muela Hydro power station and also the planned shutdown of same for a period of at least six months for its maintenance,” Seitlheko said. He says Muela’s breakdown led to a 33.3 percent decline in electricity and will, in turn, inevitably lead to an increase in the cost of importing electricity from external sources whose tariffs have also increased.
Seitlheko provides the explanation to the commercial division of the High Court in an answering affidavit where he is responding to an application by rule of law advocates- Advocates for Supremacy of the Constitution’s bid to interdict Lesotho Electricity Company (LEC)’s implementation of new electricity tariffs.
The association, commonly referred to as Section 2, failed to interdict the implementation of the new tariffs before they were effected on April 1 and now wants the court to review and set aside the new electricity tariffs. Section 2 says LEWA and its board should be compelled to conduct a proper consultation process with the public and all relevant stakeholders before the implementation of the new tariffs.
“That consultation process must adhere to the principles of openness, transparency and accountability as mandated by the Lesotho Electricity Authority Regulations of 2009.” According to the court papers, the association argued that LEC did not produce its latest audited financial statements.
The statements are said to be pivotal for evaluating the rationale behind proposed tariffs but Section 2 argue that instead of producing financials of the year ending 2023, LEC provided statements of the financial year ending on March 31st 2022.
The association’s president, Kananelo Boloetse said the latest financial statements, the tariff filling and review procedure was not adhered to and further “the accurate determination of the cost of sales necessitates recourse to the audited financial statements for the antecedent year.”
However, LEC argue that because their application was made on September 2023, the audited financial statements that were required were those of the year ending 31st March 2022 “since the authority required financial statements for a two-year lag (Year T-2) as well as management account for the year in which the application is made up to the date of submission of the application.”
Seitlheko says LEC complied with the said requirement and that the explanation was given to Section 2 when it raised a concern over the financial statements. LEWA backs LEC and says financial statements provided by the company are in order, reiterating that a licensee applying for a tariff review is required to submit audited financial statements for a two-year lag (Year t-2)
“t is for the year for which an application is made as well as management accounts for the year up to the date of submission. The reason for this requirement being that audited financial statements for the year in which a tariff application is made would not be available during the currency of such a year and in order to complete the financial picture of a licensee’s financial position up to the date of filing.” It is said that the contested tariff application and subsequent hike was filed on September 28, 2023 set for the period 2023/2024 to 2026.
LEWAs Chief Executive officer and ex officio board member, Motlatsi Ramafole, says the authority duly considered the tariff application taking into consideration submissions by stakeholders, including the complainants. He says their determination considered factors such as the cost of purchase of the electricity from other sources, repair and maintenance costs, labour costs, diesel and lubricants costs, depreciation, operating costs, return on assets and licence fees.
He also states that “the authority took into account Lesotho Electricity’s company’s financial statements.” On top of that, LEWA says it considered the fact that the 2023/2024 financial year was almost at an end which then meant that the tariffs would have applied during that financial year would have been of those approved in the previous financial year.
“It is verily averred that the authority is driven by the interests of consumers to ensure that LEC is able to discharge its mandate. It is also important to note that Lesotho imports most of the electricity that she consumes; it comes from sources whose tariff escalations the authority and or LEC has no control on.”
Subsequently, both LEWA and LEC are asking the court to dismiss Section 2’s application for lack of merit and other technical grounds. They have asked Justice Realeboha Mathaba to decline jurisdiction, arguing that the High Court in its ordinary jurisdiction is best suited to hear the matter.
“This matter is essentially a review of an administrative decision made by 2nd respondent on the application for tariff review made by the 4th respondent. This is a matter that falls squarely within the jurisdiction of the High Court in its ordinary jurisdiction and not a matter for determination by the commercial division of the High Court. This is not a commercial matter and it should be referred to the High Court to determine it in its ordinary jurisdiction.”
