PG Group Ltd and Others v National Energy Regulator of South Africa and Another (150/2017) [2018] ZASCA 56; 2018] 3 All SA 52 (SCA); 2018 (5) SA 150 (SCA) (10 May 2018)

PG Group Ltd and Others v National Energy Regulator of South Africa and Another (150/2017) [2018] ZASCA 56; 2018] 3 All SA 52 (SCA); 2018 (5) SA 150 (SCA) (10 May 2018)

The Supreme Court of Appeal held that NERSA's determination of the methodology for setting maximum gas prices did not constitute administrative action with direct, external legal effect and was not subject to review until applied in a final price determination. The court found that the methodology adopted by NERSA was irrational, as it referenced alternative fuels that were more expensive and not used by piped-gas consumers, resulting in even higher monopoly prices rather than competitive prices. NERSA's approach failed to mimic a competitive market and entrenched Sasol Gas's market power, contrary to the regulatory purpose. The court rejected the respondents' argument that the review was...

Citation
[2018] ZASCA 56
Parties
Appellant: PG Group (Pty) Ltd; Appellant: The South African Breweries (Pty) Ltd; Appellant: Consol Glass (Pty) Ltd; Appellant: Nampak Limited; Appellant: Mondi Limited; Appellant: Distribution & Warehousing Network Ltd; Appellant: Illovo Sugar South Africa Ltd; Respondent: National Energy Regulator of South Africa; Respondent: Sasol Gas Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
10 May 2018
Case Number
150/2017
Procedural Posture
Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria
Outcome
Appeal upheld; NERSA's decisions reviewed and set aside; retrospective relief granted.
Judges
Lewis, Ponnan, Leach, Davis, Makgoka
Legal Topics
Promotion of Administrative Justice Act, Gas Regulation, Rationality Review, Competition Assessment, Retrospective Orders
Administrative Law Commercial and Corporate Promotion of Administrative Justice Act Gas Regulation Rationality Review Competition Assessment Retrospective Orders

Case Brief

Summary, issues, holding and outcome

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Parties

PG Group (Pty) Ltd

Appellant

The South African Breweries (Pty) Ltd

Appellant

Consol Glass (Pty) Ltd

Appellant

Nampak Limited

Appellant

Mondi Limited

Appellant

Distribution & Warehousing Network Ltd

Appellant

Illovo Sugar South Africa Ltd

Appellant

National Energy Regulator of South Africa

Respondent

Sasol Gas Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria

Legal Issues

  1. 1 Whether NERSA's determination of the methodology for regulating gas prices under s 21(1)(p) of the Gas Act constitutes administrative action subject to review.
  2. 2 Whether the maximum gas price determination by NERSA was rational and reasonable.
  3. 3 Whether the delay in bringing the review application was unreasonable and should bar the application.

Ratio Decidendi

The Supreme Court of Appeal held that NERSA's determination of the methodology for setting maximum gas prices did not constitute administrative action with direct, external legal effect and was not subject to review until applied in a final price determination. The court found that the methodology adopted by NERSA was irrational, as it referenced alternative fuels that were more expensive and not used by piped-gas consumers, resulting in even higher monopoly prices rather than competitive prices. NERSA's approach failed to mimic a competitive market and entrenched Sasol Gas's market power, contrary to the regulatory purpose. The court rejected the respondents' argument that the review was...

Court Disposition

Appeal upheld; NERSA's decisions reviewed and set aside; retrospective relief granted.

Orders

  • The appeal succeeds with costs, including the costs of two counsel.
  • The order of the court a quo is set aside and substituted by the following: