Eskom cannot cut electricity to struggling municipalities - Supreme Court of Appeal
Pretoria - Eskom was told it was unlawful to interrupt electricity supply to paying end-users.
In what is regarded as a groundbreaking judgment for consumers, the Supreme Court of Appeal (SCA) has confirmed Eskom could not simply interrupt electricity supply to struggling municipalities due to non-payment.
The power giant interrupted electricity supply to two cash-strapped municipalities - Emalahleni (Witbank) Municipality and the Thaba Chweu Municipality (includes Lydenburg) in Mpumalanga - due to non-payment. This was in a bid to recover the millions of rands owed to it.
Both municipalities as well as several businesses which fall under these municipalities had turned to the Gauteng High Court, Pretoria, where they objected to this.
The court at the time found Eskom had no right to simply cut the power supply and this was done unlawfully.
Eskom took the matter on appeal.
Business rights watchdog AfriSake, which entered the dispute as a friend of the court, said the SCA judgment meant the days of Eskom unlawfully interrupting electricity supply to paying end-users in defaulting municipalities to recover debt from municipalities should now be over.
Five SCA judges held that without the national and provincial governments’ intervention in the financial crises of struggling municipalities, all were doomed.
In the opening to the judgment, Deputy President of the SCA, Judge Xola Petse, remarked: “The facts of these appeals graphically illustrate the distressing state of municipal governance in this country, which depict a picture of the dysfunctional state of affairs bedevilling local government.”
He said the two municipalities occupying centre-stage have been aptly referred to by counsel as financial delinquents, dysfunctional municipalities, and municipalities plagued by poor governance and financial mismanagement.
Businesses in the two municipalities said they have paid the municipalities for their electricity consumption, but the municipalities repeatedly failed to pay Eskom. This in turn resulted in their power supply being cut.
They argued these electricity interruptions have had a devastating effect as they “threaten the very fabric of society”, with hospitals, schools, households and businesses severely disrupted.
The court was told when the power supply was cut, all sewage works immediately came to a standstill. This meant sewage was not pumped to the sewage processing plants, but instead simply sat for the duration of the cut-off, with the associated, serious risks to the health of the community.
Another consequence was that water purification and processing plants as well as those pumping water to the community to ensure adequate water pressure came to an immediate standstill.
This meant taps ran dry, households ran out of water and critical water based facilities ceased functioning. Also, when the supply was reconnected, it would take some time for adequate reserve to be generated to enable the community and business to recommence, it was argued.
Eskom said it resorted to drastic measures because not only had the municipalities persistently failed to pay for electricity, they had also failed to honour their payments according to acknowledgements of debt they signed.
It said it tried to contain the spiralling electricity debt which, over the years, had increased and impacted on its overall capacity to generate electricity.
According to Eskom, if it were pushed to a point where it could no longer generate electricity, the whole country would be plunged into darkness.
The SCA said in terms of the constitution, if a municipality, as a result of a crisis in its financial affairs, was in breach of its obligations to provide basic services or to meet its financial commitments, the relevant provincial or the national executive should intervene and there had to be a mediation process.
The court said it was irrational for Eskom to terminate the power supply while it knew these municipalities could not pay.
The SCA upheld the earlier judgment that organs of state, including Eskom and municipal governments, had to prove they have complied with the principles of intergovernmental dispute resolution before taking legal action against other organs of state.