Electricity price increase threatens to torpedo service delivery

Electricity provision is a human right and a key duty for local government. Electricity is also necessary to access other rights, such as the right to information. Local government has failed – badly – to provide cheap, reliable electricity services, partly because of its own failings and partly due to Eskom’s gross mismanagement. 

This article is the first in a series that will discuss the electricity crisis in South Africa. The series will examine the crisis from different angles including: the consequences for South Africans; electricity generation and its provision, and government’s approaches. 

 

Citizens expected to pay the cost. 

Eskom sparked outrage when it applied for a 20.5% electricity price increase for the 2022/23 financial year, effective from 1 April. The utility argued that the increase was needed to raise R6.5 billion for diesel to power its backup generators. 

This price increase comes at a time when the country’s economy and citizens are still in recovery from the significant hit caused by the Covid-19 pandemic. Statistics South Africa released the country’s record high unemployment figures showing the unemployment rate at 35.3% of the labour force in the fourth quarter of 2021. In addition, consumer price inflation rose to 6.5% in May, the highest level in over five years.

Whilst facing yet another electricity price hike, citizens are simultaneously struggling to survive under the rising cost of living as the prices of energy, fuel, food and basic consumer goods continue to surge. While rising electricity prices affect everyone, low-income home households will be disproportionately affected because their spending on electricity is higher as a proportion of disposable income compared to that of higher income households. 

Considering the current economic climate is characterised by rising inflation and slowing wage increases, civil society groups including Organisation Undoing Tax Abuse (OUTA), Southern African Faith Communities Environment Institute (SAFCEI), agricultural organisations and others have urged the National Energy Regulator of South Africa (NERSA)  to reject Eskom’s call for the tariff hike.  

Some municipalities indicated that they would also formally object to Eskom’s application. On 21 January 2022, the City of Johannesburg lodged an objection against Eskom’s application. The City argued that Eskom’s request would perpetuate the country’s high unemployment rate which may lead to continued non-payment for municipal services. 

The City of Tshwane has also rejected Eskom’s proposed price hike stating that it acknowledges that Eskom is having financial trouble however it should not attempt to shift the burden to consumers. The City of Cape Town and the Nelson Mandela Bay Metropolitan Municipality also added to the  municipalities which called out Eskom. 

Infringement of the Constitution

An ongoing issue is also municipalities’ failure in discharging their obligation to provide basic municipal services to the communities they serve. Section 153 of the Constitution states that municipalities are obliged to ensure the provision of basic services. According to national and municipal legislation, citizens have no absolute right to electricity but rather a right to access to electricity. Maladministration and corruption in government and public entities results in limited resources available impeding on the realisation of electricity provision. 

Emalahleni, Thaba Chweu, Ngwathe and Lekwa local municipalities have defaulted in payments to Eskom over the years however the Constitutional Court and Supreme Court of Appeal, respectively, ruled that the debt-stricken state owned entity cannot cut electricity supply for people due to defaulting municipalities. These rulings are great examples of how the law can protect citizens from bearing the cost of internal disputes between Eskom and municipalities. 

 

Residents’ cries

In the last few years, the country has seen an alarming number of protests occurring all over the country due to lack of electricity. Areas such as Soweto, Makana, Cradock, Kimberly and Wesbank (Cape Town) have all seen violence erupt as community residents burn tires and barricade roads in order for their grievances and cries against their municipalities’ failures to ensure sustained electricity supply. 

In March 2021, Buffalo City ratepayers complained about the unbearable increases in municipal rates. In July 2021, the City of Cape Town implemented a 13.1% increase in its electricity tariffs which was met with outrage and opposition from residents who claim they have been getting significantly less electricity units than the amount they paid for them. As a result, in August 2021, the Electricity Tariffs Must Fall campaign took to the streets in protest, outside of Parliament in Cape Town. In December 2021, protests erupted in Soweto after the supply of electricity was disconnected from hundreds of households due to a culture of non-payment. Soweto residents argue that they cannot afford current electricity prices. 

The Pietermaritzburg & Natal Midlands Business Chamber (PMCB) and Nelson Mandela Bay Business Chamber argue that electricity tariffs should be based on the cost of providing electricity as well as a reasonable profit margin to be used for electricity infrastructure maintenance; however service delivery and basic maintenance has deteriorated over time. 

As local governments continue to reiterate that income from electricity sales is for service delivery, it is unfair for communities consisting of majority poor and working class to have to be subjected to exorbitant electricity price increases or electricity supply cuts due to municipalities’ debts. Perhaps legal reform is necessary to protect citizens from bearing the consequences of Eskom’s and municipalities corruption and inefficiency. 

As South Africa’s energy crisis continues, it is empowering to see collaborative action by civil society groups stand up against Eskom and place pressure on the government. Seeing a new trend of municipalities vocalising their objection to the price increase, is a positive development in the push back against Eskom and NERSA. 

Written by Yolanda Mpinana

July 11, 2022

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