Restructuring the Electricity Distribution Industry: public hearings Day 3

PMG 27 July 2012.

Date of Meeting:

27 Jul 2012


Mr S Njikelana (ANC)


The Southern African Faith Communities and related organisations noted the growth in informal settlements. There were many benefits to electrification. The high cost of energy was forcing people to look for alternative power sources and illegal connections. Higher tariffs were being imposed as a result of non-payment. SAFCI argued that the basic electricity allocation should be increased. There were rumours that the electrification process was being stalled in some areas, as municipal officials might be held liable for any deaths due to illegal connections.

The Energy Intensive User Group represented some of the major users of electricity. Financial management was a particular area of concern. Those who paid their bills were being punished by higher tariffs to cover those who did not. There was a disparate tariff structure. Businesses were migrating to areas where they could find lower electricity charges, particularly in areas supplied by Eskom. This increased the burden on residents in the areas vacated by business.

The South African Local Government Association (SALGA) noted a problem with dual regulatory systems, and recommended that service level agreements needed to be put in place. Prices and tariffs were another problem area. The viability of municipalities had to be considered when tariffs were set. The Department of Energy needed to lead the process of designing an alternative structure for the industry.

The Chamber of Mines represented a range of mining companies of various sizes. It was an energy intensive industry and operations had to be suspended if there was a failure in supply due to safety issues. The industry consumed about R13 billion in electricity annually. Larger companies were supplied directly by Eskom, which understood their needs. Smaller mines were dependant on municipalities, and the quality of service was often poor. The Chamber proposed that electricity distribution be consolidated under a single public entity.

The City of Cape Town was concerned by the growing difference between Eskom and municipal tariffs. Customers of the City paid significantly more to subsidise domestic users than their Eskom-supplied counterparts. The City had launched a massive refurbishment programme and was doing well with training, but might not retain these people in a stronger economy. Cash flow was a major consideration for the Metro. Consideration should be given to subsidies on a national level. Eskom customers should be subject to a surcharge to cover the costs of municipal services. Consideration must be given to giving metros the sole right to distribute electricity within their boundaries.

The South African National Energy Development Institute said that several issues still needed to be addressed. New technology was available and should be used. Service delivery levels were declining and there was not enough focus on the consumer. There was a lack of reliable data.

Members questioned the fairness of using electricity revenue to subsidise other municipal services and the practice of cutting off electricity supply as a credit control measure. Electricity tariffs were placing constraints on the economy. Members were also concerned over the disparity of tariffs between Eskom and the different municipalities…


One thought on “Restructuring the Electricity Distribution Industry: public hearings Day 3

  1. Indeed “Consideration must be given to giving metros the sole right to distribute electricity within their boundaries”
    Otherwise it does not make sense to request the municipality to be responsible of the management of the whole region if it is not given the tools to do so. One of them being the management of all the local resources which exist in its area.
    These policies of local management and development made for and by the local people is half heartily defined and implemented, probably because most just took them from somewhere else or were told to do so but did not really buy them. In PE foe example we have an ANC PEC rep. who wants to control and micro manage the Municipality. For many, their power overule any local power or autonomy.



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