ConCourt rules Eskom cannot throttle the power supply of two defaulting municipalities

The community of Lekwa has become the poster child for community failure.

  • A majority of judges at the Constitutional Court have ruled that Eskom wrongly cut electricity supplies to two defaulting municipalities.
  • The court found that Eskom had not given residents an opportunity to comment before reducing power.
  • But a minority ruling ruled that residents could not prove they had a constitutional right to seek power from Eskom.
  • For more financial news go to News24 Business front page.

SA’s highest court has ruled that Eskom was wrong to throttle the amount of electricity it supplied to two heavily indebted municipalities.

In a close five-to-four verdict on Friday, the constitutional court agreed with tariff payers in the two municipalities that the utility made a mistake in reducing its large electricity supply.

In 2020, Eskom began reducing the amount of energy it provided to Ngwathe Municipality in Free State and Lekwa Municipality in Mpumalanga after they each incurred debts of over R1 billion.

Dissatisfied rate payers then took Eskom to court, arguing that they were being unjustly penalized for their municipalities’ inability to pay Eskom. Tariff payers argued that they were not informed of the cuts, leaving them often without power for more than 10 hours a day.

interdict

In August 2020, the North Gauteng High Court in Pretoria ruled on behalf of the tariff payers, ordering the utility to restore “uninterrupted power supply” to both Lekwa and Ngwathe.

The verdict was upheld on appeal. Eskom then appealed to the Constitutional Court.

The Supreme Court has now dismissed Eskom’s appeal, finding that its decision to reduce mass electricity supply violates the rights of community residents as set out in the Bill of Rights.

READ | Mpumalanga towns stuck between Eskom and dysfunction pin hopes on ConCourt

This means that Eskom cannot reduce the amount of bulk flow it provides to the two municipalities below what it has previously supplied.

But the verdict was not unanimous.

The majority decision, authored by Judge Madlanga (with the concurrence of Mathopo, Mhlantla, Theron and Tshiqi), found that Eskom’s decision to reduce power supply was unfair as it failed to inform residents before making the decision.

The five judges ruled that residents of the communities were denied the opportunity to make representations to Eskom before powers were reduced.

But a minority ruling written by sitting Judge Unterhalter (with the concurrence of Kollapen, Majiedt and Mlambo) found that rate payers had failed to demonstrate that residents had a constitutional right to purchase electricity from Eskom rather than their communities.

It found that the regulatory framework for electricity supplies municipalities, not Eskom, with the obligation to supply electricity to residents.

The minority view also worried about what would happen if Eskom had to increase the amount of electricity it provides to all of SA’s indebted municipalities.

However, the majority decision noted that it did not say Eskom could not reduce supply. Rather, it underscored the fact that Eskom had to inform residents well in advance of any cuts being made, so that they could object if they so wished.

Eskom said in a brief statement on Friday that it would “adhere to the decision of the Constitutional Court while considering measures to safeguard its best interests in this matter.”

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