The seizure of cash-strapped Emfuleni municipality’s cars, furniture and other equipment on Monday is not nearly the end of Eskom’s efforts to stop the non-payment for its bulk supply of electricity to Vanderbijlpark and surrounds.
Eskom in December launched a court application to force energy regulator Nersa to “investigate, consult and take remedial measures” to address Emfuleni’s failure to comply with the conditions of its electricity distribution licence.
This includes its failure to pay for bulk purchases.
Emfuleni currently owes Eskom R2.3 billion despite the fact that, according to Eskom, it collects more than 90% of its electricity revenue.
Monday’s action against Emfuleni follows a court order in 2018. Eskom was interdicted against cutting electricity supply to the municipality, which would have prejudiced end-users who faithfully paid their electricity bills. The court ruling also resulted in five of Emfuleni’s big customers paying Eskom directly for the electricity they consume.
Eskom says if the latest application succeeds, it will result in a total of 200 large customers paying Eskom directly.
A date has still not been set for the latest court application to be heard.
Businesses want action
Emfuleni business people however want to take the matter further.
The Vaal Triangle Chamber of Commerce, with ArcelorMittal and property group Growthpoint among its members, succeeded in having Nersa’s determination of Emfuleni’s tariffs for 2019/20 reviewed and set aside.
The Vaal Triangle Service Forum in December applied to Nersa to revoke Emfuleni’s distribution licence and award it to Eskom instead, or instruct Emfuleni to appoint Eskom as its agent to perform its total electricity function.
Nersa has yet to respond and the forum has decided to proceed with a court application to force Nersa to do it.
Eskom stated this week that it will have to do a due diligence to assess the job before taking over electricity distribution in Emfuleni. That, it said, can be done in less than six months.
Emfuleni seems to be following the bad example of Harrismith-based Maluti-a-Phofung municipality, where the sheriff also attached property about a year ago, in lieu of outstanding payments to Eskom.
Maluti now owes Eskom more than R4 billion.
After getting a cold shoulder from Nersa, agricultural services group Afgri approached the High Court to get Maluti’s distribution licence revoked by Nersa or to have Eskom appointed as Maluti’s agent for supplying electricity to end-users in the municipality’s jurisdiction.
In December the Harrismith Business Forum and 13 big electricity users – including the Nestlé cereal factory outside Harrismith, Shoprite Checkers and the local private hospital – joined the application.
It has not yet been scheduled for a hearing.
Many of these businesses have been paying Eskom directly since 2018.
Taking aim at the distribution licences of errant municipalities seems to be a new legal strategy for paying end-users, who fear having their supply cut due to the failure of their distributor to pay its bulk account.
Rock and a hard place
Eskom is often interdicted by end-users from cutting the bulk supply, which brings relief to the end-users but protects the municipalities from being held accountable, while Eskom municipal debtors grow at an alarming pace.
The debt owed to Eskom by municipalities already exceeds R26 billion
The pressure on Nersa to act has seemingly resulted in a change in attitude at the regulator.
At a meeting of its electricity sub-committee last week, chair Nomfundo Maseti criticised Nersa officials for being too patient with municipal distributors.
While discussing a report following an audit of municipal distributors, the committee heard that many municipalities fail to comply with the conditions of their distribution licences. They don’t pay for bulk purchases, they fail to ring-fence electricity revenue and neglect maintenance of infrastructure.
The officials complained that the situation continues and in fact deteriorates year after year.
Maseti, with the support of other regulator members, said officials should bring these matters to the regulator, which may sit as a tribunal, empowered to issue compliance notices.
Should a municipality fail to respond to the compliance notice by taking corrective action, the tribunal may impose an administrative penalty of up to R2 million per day for as long as the non-compliance continues.
Maseti also emphasised that all Nersa licensees should be treated equally in this regard, including Eskom.