December 17, 2017

Who is responsible for providing electricity?

This is no idle question. The financial reverberations are significant as service providers wrestle each other to gain desperately needed revenue, and debts mount in municipalities.

So a lot is at stake when parliamentary committees wrangle over this question.

It also explains why a year or more has passed without any resolution. But what makes it especially difficult to reach a conclusion, parliament heard last week, is an apparent lack of political will to resolve this dilemma on the part of the relevant government departments.

A joint meeting of the committees of Energy and Cooperative Governance and Traditional Affairs (Cogta) was held to receive an update from the Inter-Ministerial Task Team (IMTT) on the electricity distribution industry and the rehabilitation of infrastructure.

No ministers pitch up for the Inter-Ministerial Task Team update on electricity reticulation.

The IMTT comprises the Ministers of Energy, Cogta, Finance and Public Enterprises as well as the President of the South African Local Government Association (Salga) and the chairperson of the Eskom Board.

It was constituted in terms of the Intergovernmental Relations Framework Act of 2005 to consider a long-standing dispute over whether the current dispensation in which Eskom reticulates and distributes electricity within a municipal boundary is in conflict with the Constitution.

Therefore frustration at the meeting over the non-appearance of any of the mandated ministers is understandable.

The Deputy Minister of Energy was present, which was fortunate because she managed to calm impatient members who were all for bringing the meeting to an abrupt and immediate adjournment. She coaxed an agreement to proceed with the presentation of the IMTT briefing, although it looked as if she was the only person in the room who hadn’t already heard it in its current form.

The frustration at the lack of progress in the dispute was palpable, especially as what was billed as a joint meeting between the portfolio committees on Energy and Cogta turned out to be a meeting only of the energy committee members, all of whom had heard the IMTT’s “update”, and had hoped for an actual progress report. Members declared that the reportback circulated for this meeting added nothing new to what has been said many times before, including at a Cogta committee meeting in October.

The consensus was that the ministers tasked with the mandate were not taking it seriously. Most of the anger was reserved for the no-show of Cogta Minister Des van Rooyen, who was appointed leader of the IMTT.

The common view from the Committee was that IMTT had done little more than pass the buck by setting up an Advisory Panel, and as far as could be established the Advisory Panel so far had nothing to add. The Panel was the IMTT’s response to a threat by Salga to approach the courts for a declaratory court order.

The phrase “lack of political will” came up repeatedly at the meeting as it was heard that this issue requires a joint decision through the cooperation of all the departments represented on the IMTT, working with Treasury, and if necessary generating legislative amendments.

The full name of the task team is the Inter-Ministerial Task Team on Constitutional, Structural and Systemic Challenges relating to electricity reticulation, which demonstrates that the conflict has little to do with electricity and much more to do with the law.

Our Constitution, with its commitment to three-tier government, declares in section 156(1) and Schedule 4B that municipalities have the “executive authority” to administer the reticulation of electricity. However, the Constitution nowhere defines “executive authority”.

Meanwhile, Eskom, which has been supplying South Africa’s electricity since 1922, has been granted a licence to distribute and trade in electricity by the National Energy Regulator of South Africa (NERSA), which is mandated to regulate the energy industry in accordance with government laws, policies, standards and international best practices.

The result is two service providers – municipalities and Eskom – have the go-ahead to reticulate electricity in municipal areas. Historically Eskom was solely responsible for electricity supply within all municipal boundaries, but that was before local level post-1994 government established municipal government and firm municipal boundaries.

What is required of the IMTT and its Advisory Panel are decisions that reach as far as the Constitution. The question is whether granting Eskom permission to distribute and reticulate electricity within municipal boundaries is in conflict with section 156(1) of the Constitution.

It raises questions about whether Eskom can be compelled to enter into a Service Delivery Agreement as required by the Local Government Municipal Systems Act of 2000. Can municipalities impose surcharges on fees in the “Eskom supply areas” assigned by NERSA? Who can authorise credit control measures within these supply areas? In other words, who benefits from fee payments and who gets to decide when debt reaches levels that necessitate the switching off of electricity supplies, given that according to Section 160 (1)(a) of the Constitution a municipal council exercises power over all functions of the municipality.

As far as municipalities and Salga are concerned Eskom is usurping its constitutional authority and its role is only that of a service provider. But the non-existence of Service Level Agreements means loss of revenue and lack of credit control by municipalities.

One of the issued that had been raised repeatedly by relevant Committees is who provides public lighting, as this is a safety matter. Eskom. for its part, believes this to be a municipal responsibility, but the municipalities struggle to deliver, given loss of revenue to Eskom and Eskom’s imposing of a high flat rate tariff even in areas where municipalities have installed energy efficient lighting through the Energy Efficiency Demand Side Management Grant.

The IMTT expects the Department of Energy to develop a policy on the provision of public and street lighting by the end of September 2018. It is also mandated to include policy on renewable energy.

Other areas of dispute concern the municipal debt owed to Eskom, especially historical debt, and the unsustainability of current payment agreements signed between Eskom and municipalities. Eskom has agreed to reduce the interest rate charged on overdue municipal bulk accounts but it charges a penalty when municipalities exceed a Notified Maximum Demand period. It is not uncommon for interest to form the larger part of the total municipal debt.

The Advisory Panel, which was yet to be appointed, has been given two months to resolve these matters.

Moira Levy

Last modified on Sunday, 03 December 2017 17:10

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