Court affirms right to interrupt electricity of defaulting municipalities – Eskom

Power utility says victory is a critical step in their sustainability given levels of indebtedness within municipal sphere

High Court affirms Eskom’s right to interrupt electricity against defaulting municipalities

35 May 2017 

The Pretoria High Court has confirmed the constitutional right of Eskom to effect scheduled electricity interruptions when it dismissed applications by AfriForum and other businesses.

“Astral, Bridgestone, AfriForum and Mediclinic had sought to prevent Eskom from utilizing its constitutional right of scheduled interruptions in Madibeng, Lekwa and Kamiesberg to recover overdue debt,” explains Suzanne Daniels, Head of Legal.

The applicants’ contention, heard between the dates of 2-3 May 2017, was that Eskom’s conduct, in all the cases, is unconstitutional, unlawful and unreasonable and should accordingly be reviewed and set aside.

The applicants’ sought different relief against Eskom in the following orders:

- declaratory orders to the effect that Eskom is not permitted to interrupt the supply of electricity to any local authority as a means to collect acknowledged debts owed to it;

- final interdicts interdicting Eskom from exercising the power to interrupt electricity as a debt collection measures in respect of any local authority; alternatively;

- interdicts restraining Eskom from exercising such power without in each instance first obtaining an order of court authorising it to do so;

- orders reviewing and setting aside Eskom’s decision to interrupt electricity to the municipalities on constitutional and administrative law ground; and

- challenging the constitutionality of section 21(5) of the Electricity Regulation Act (ERA) and inviting the court to read into the section a requirement of judicial pre-authorisation for the termination or reduction of the supply of electricity when employed as a means of debt collection; and

- an order directing one of the applicants (ASTRAL) to make direct payment to Eskom.

On the second day of the hearing Eskom and ASTRAL reached a settlement agreement in respect of the direct payment relief and the hearing proceeded with the matters of the three remaining applicants.

Eskom opposed all the relief sought on the other issues raised by the remaining applicants, arguing the mootness of all the cases and the legislative rights of Eskom to interrupt or terminate the electricity in terms of section 21(5) of ERA.

The court agreed with all the arguments presented by Eskom to the effect that section 21(5) is constitutional and Eskom is empowered by statute to disconnect defaulting customers, which includes the municipality.

“In granting the judgment in favour of Eskom, the court confirmed that any exercise by Eskom of the power in section 21(5) of ERA will be administrative action reviewable by the court on the ground of legality, reasonableness and procedural fairness under section 33 of the Constitution and the Promotion of Administrative Justice Act (PAJA),” Daniels states.

“This victory is a critical step in the sustainability of Eskom given the levels of indebtedness within the municipal sphere. As a key enabler of the economy, Eskom’s sustainability is vital for the development of our nation,” Daniels concludes.

Issued by Eskom Media Desk, 25 May 2017