Are landlords suppliers of electricity? Do landlords have the right to charge administrative costs or service charges for providing electricity? Picture: Pexels
CONSUMER - Are landlords suppliers of electricity? Do landlords have the right to charge administrative costs or service charges for providing electricity? Can a landlord disconnect electricity supply due to arrear rentals, claiming the right as a supplier of electricity?

A person who sells token vouchers for prepaid electricity meters, including a landlord, is not a supplier but a vendor. About four million prepaid electricity customers use the token vending service, but the vendors do not supply electricity.

The owner or landlord who installs cable network and individual prepaid electricity meters or separate meters that work off the (bulk) credit meter, does not become a supplier of electricity.

The owner cannot disconnect electricity supply to his tenant’s dwelling by justifying that he has the right to since he installed the cables and meters at his cost.

Eskom is the country’s main generator of electricity, with local government (municipalities) as distributors. City Power Johannesburg, which has the City of Johannesburg as its only shareholder, distributes electricity to Joburg.

Distributors such as the municipalities and City Power have the legal right to disconnect electricity for non-payment, to increase the tariffs and to levy additional charges in terms of legislation.

Let us take an example where the owner of a multi-tenanted block installs separate sub-meters to record the electricity consumption of each tenant. These meters are not prepaid or credit meters, but work off the single main credit meter. The supplier, City Power, bills the landlord monthly, and in addition to the monthly consumption costs bills the landlord R385 per month in service charges for the entire building.

The landlord, in turn, requires each of the 80 tenants to pay its company that owns the building the monthly consumption charges and the monthly service charge of R385. This means that while the landlord pays the supplier City Power R385 per month (the actual service charge confirmed by City Power) for the entire building, he/she collects approximately R30000 from the tenants in service charges alone. The landlord justifies this amount or the right to levy service charges on the grounds that he/she provided the electricity service to the tenants through the cable network he/she installed to connect with City Power.

This was the matter of the Plettenberg flats’ tenants situated at 32-34 Bruce Street in Hillbrow, Joburg, before the Gauteng Rental Housing Tribunal in 2013. The Tribunal, on June14, 2013, ruled in favour of the tenants in terms of section 13(1) of its Unfair Practices Regulations, ordering the landlord - Young Ming Shan CC - to refund the tenants the service charges from May 2009.

The tribunal rejected the landlord’s argument that the leases with the tenants gave him/her the right to levy service charges and that he/she provided a service as a supplier to the tenants. The landlord did not have a licence to sell or supply electricity and in terms of the electricity by-laws and Electricity Regulation Act, the landlord was therefore prevented from making a profit.

The tribunal acknowledged the landlord’s submission that he/she was responsible for the installation and maintenance of the electrical network and incurred costs in collecting electricity payments. It held that the landlord should have factored the administrative costs into the rental when he/she determined rentals for tenants.

However, he/she could not levy its own service charge “in addition to the rental and the cost of consumption of the electrical services by the tenant”.

The landlord took the tribunal’s decision to the high court on review and to have its decision set aside, arguing that he/she was entitled to the service charges. That the "profit" it made through the service charges were reinvested for maintenance of the building and used for subsidising other services. Notably, he/she was reselling electricity to the tenants and was therefore entitled to service charges.

This was the case of Young Ming Shan CC v Chagan NO and Others 2015 (3) SA 227 (GJ) at the South Gauteng High Court, Joburg. In the judgment handed down on February2, 2015, the court found no unfairness, unreasonableness or prejudice in the tribunal’s deliberations and ruling and dismissed the landlord’s case with costs.

Judge Coppin said that insofar as the landlord averred in the proceedings before the Tribunal, that he/she performed a similar service to the council in respect of the supply of electricity, he/she did not establish that they were a “service provider” as envisaged in the Electricity Regulation Act.

“In terms of that law, ‘service provider’ means ‘a person or institution of any combination of persons or institutions which provide a municipal service in terms of a service delivery agreement’.”

The landlord was:

Interdicted and restrained from levying the service charge.

Directed to provide each tenant, on demand, a copy of the monthly account from City Power in respect of the property.

Ordered to repay to the tenants all service charges levied against them since May 2009.

The successful outcome of the tribunal’s ruling and the high court judgment confirming its decision should be a warning to landlords who use the sub-meters and prepaid meters. They do not have service delivery agreements with municipalities.

Dr Mohamed is chairperson of the Organisation of Civic Rights and deputy chairperson of the KZN Rental Housing Tribunal. For advice, contact Pretty Gumede or Loshni Naidoo at 031 304 6451/[email protected] or [email protected]

Daily News