The High Court has heard a case in which lobby group, Advocates for the Supremacy of the Constitution, known as SECTION 2, is seeking to reverse electricity tariff increases approved by the Lesotho Water and Electricity Authority on 1 April 2024 and 1 April 2025.
The case was before Justice Polo Banyane on Tuesday.
SECTION 2 wants the court to declare the current tariffs unlawful and order the Lesotho Electricity Company (LEC) to refund money collected from the public since the hikes took effect.
The Lesotho Water and Electricity Authority (LEWA) Board of Directors, LEWA, LEC and Attorney General, Advocate Rapelang Motsieloa, are cited as respondents in the case.
Judgement is expected to be delivered on June 12.
SECTION 2 is represented by Advocate Fusi Sehapi while Advocate Kabelo Letuka is for the LEWA.
In his founding affidavit, SECTION 2 president, Kananelo Boloetse, submitted that the Commercial Division of the High Court has jurisdiction to deal with the matter because the dispute involves commercial activities, specifically the setting of electricity tariffs by LEWA and its impact on consumers.
“The dispute at hand involves issues related to commercial activities, specifically the setting of electricity tariffs by the Lesotho Electricity and Water Authority (LEWA) and its impact on consumers,” the affidavit states.
The affidavit cites Section 104 (1) of the Lesotho Authority Act, 2002, as Amended, which grants LEWA power to enforce the law However, it notes that subsection (2) “explicitly states that nothing in the Act shall oust the jurisdiction of the civil courts,” meaning civil courts, including the Commercial Division, retain jurisdiction over disputes arising under the Act.
Boloetse contends the case involves intricate legal and factual considerations, including compliance with regulatory procedures, interpretation of statutory provisions, and assessment of the reasonableness of tariff increases.
Given that complexity, he says, “the expertise of judges in the Commercial Division, who are well-versed in commercial law and have experience handling complex commercial disputes, is necessary to ensure a fair and informed adjudication.”
Setting out the background, SECTION 2 said on 30 January 2024 it received an invitation from LEWA, designated as a crucial stakeholder, to prepare a 15-minute presentation scrutinising the justification behind an application by the LEC.
The LEC was seeking increases of 23 percent, 15 percent, and 15 percent on both energy and maximum demand charges across all customer categories for the financial years 2023/2024, 2024/2025, and 2025/2026, respectively.
A stakeholders’ consultation meeting was convened in the LEWA’s conference room on 02 February 2024, from 09:00 to 13:00 — just three days after the invitation. This allowed limited time for thorough preparation and examination, the applicants argue.
Enclosed with the invitation was LEC’s extensive Multi-Year Tariff Review Application spanning 2023/2024–2025/2026. But upon scrutinising it, SECTION 2 says it found that the attached audited financial statements pertained to the financial year ending 31 March 2022, not the preceding financial year ending 31 March 2023.
Consequently, the affidavit argues, the tariff application was devoid of the most recent audited financial statements, which are “pivotal for evaluating the rationale behind any proposed tariff increments.”
The affidavit points to the Tariff Filing and Review Procedure of February 2012, which stipulates that data furnished by the licensee to the authority should encompass, among other aspects, the cost of sales for the preceding year. SECTION 2 maintains that accurate determination of the cost of sales necessitates recourse to the audited financial statements for the antecedent year.
“At the 02 February 2024 meeting, the 1st Applicant (LEWA Board of Directors) articulated profound apprehensions regarding the absence of transparency and accountability in the tariff-setting process, Boloetse submitted.
He noted that the LEWA Board of Directors unequivocally asserted that, in the absence of access to this essential financial data, both itself and other stakeholders would be precluded from offering substantive contributions to the tariff review process.
The affidavit says this submission was made “fully cognisant of the provisions delineated in Section 94(1)(2) of the Companies Act, 2011, which imposes obligations upon the board of LEC.”
Those obligations mandate that, within three months subsequent to the conclusion of each financial year, the accounts pertaining to the company’s financial year are to be duly completed and endorsed on behalf of the board by no fewer than two directors, the applicants contend.
LEWA Board of Directors was then tasked to deliver the presentation before representatives of both LEWA and LEC on behalf of consumers.
Following that, the LEWA convened a public hearing on 14 February 2024 where the board and other stakeholders made oral and written submissions opposing the proposed increases.
Despite those objections, the affidavit states, LEWA approved tariff increases of 9.6 percent for 2023/2024 and 11 percent for 2024/2025, which were then implemented by LEC on 1 April 2024 and 1 April 2025.
Beyond nullifying the hikes, Boloetse asks the court to compel LEC to submit its latest audited financial statements for the year ending 31 March 2023 to the LEWA and its Board of Directors.
The movement also seeks an order directing LEWA and its board of directors to conduct proper consultation with all relevant stakeholders, including SECTION 2, before making any tariff decisions.
SECTION 2 further wants the court to declare that this consultation process adheres to openness, transparency, and accountability as required by Section 5 of the Lesotho Electricity Authority (Electricity Price Review and Structure) Regulations of 2009.
The group further asks the court to order the LEWA and its board to uphold consumer rights, including the right to be heard and to participate in decisions affecting them, and to ensure all tariff decisions are made in the best interests of consumers with full regard to their welfare.
The application argues the two tariff increases were implemented without adequate public participation and proper scrutiny of the utility’s financial position. The demand for the 2023 audited statements targets the financial justification used for the hikes.
The case tests LEWA’s compliance with its own 2009 regulations, 2012 filing procedure, and the Companies Act.
If granted, the orders would not only void the past two increases but also force regulators and LEC to change how future tariffs are set.
