South Africa: High Court Affirms Eskom’s Right to Terminate Electricity Supply to Defaulting, Non-Paying Customers

  • In a judgement delivered by the South Gauteng high court on Tuesday 13 October 2020, the court affirmed Eskom’s right to interrupt or terminate electricity supply to non-paying customers.
  • This case was brought against Eskom by Pioneer Foods, in which it had sought to review and set aside Eskom’s 2018 decision to interrupt electricity supply to the Walter Sisulu Municipality due to its failure to pay for electricity supplied in terms of the municipality’s agreement with Eskom.

The court ruled that Pioneer Foods had no standing in the electricity supply agreement between Eskom and the municipality, and dismissed the application with costs. Pioneer Foods is a customer of the municipality, and as such had no legal right (locus standi) to bring the case against Eskom to court.

This is a landmark judgment affirming the validity and lawfulness of Eskom’s rights, powers and entitlement to invoke section 21(5) of the Electricity Regulation Act of 2006 to interrupt the supply of electricity to a delinquent customer, in this case the Walter Sisulu Municipality in the Eastern Cape.

Eskom has welcomed this landmark judgment as the court has set the important legal principle that Eskom is only obliged to supply electricity to paying customers.

The Electricity Regulation Act of 2006 entitles Eskom to interrupt electricity supply to a non-paying customer and in this matter Eskom had taken proper preliminary steps and due process which did not entitle the applicant to the interim interdict.

The court also held that Eskom’s interruptions of supply to the defaulting municipality were important and necessary for Eskom’s survival as Eskom could not be expected to continue supplying electricity to a non-paying customer.

Related: Eskom attaches farmland worth R3.4 billion from defaulting municipality 

Pioneer had an available internal remedy which entailed lodging a dispute with Nersa. The Court held that before an aggrieved party approached the Court for relief against Eskom, it should demonstrate that it first exhausted the internal remedies contemplated by the Electricity Regulation Act by approaching Nersa.

The relationship between Eskom and the municipality is reciprocal in that Eskom supplies bulk electricity against payment.

Having received the judgement, Eskom is now in a position to enhance its collection efforts from defaulting municipalities, who collectively owe Eskom in excess of R31 billion in overdue debt.

Author: Bryan Groenendaal

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