Eskom might be cutting off defaulting municipalities, the power supplier said in a press statement in a press statement on Friday.
Eskom announced that it “has moved to notify all parties who are likely to be materially and adversely affected as the company contemplates interrupting bulk electricity supply to the top 20 defaulting municipalities across the country with effect from 05 June 2015.”
Zethembe Khoza, the interim chief executive of Eskom said: “Non-payment for electricity undermines Eskom’s statutory obligation to generate and supply electricity to municipalities nationally on a financially sustainable basis.
“We have therefore decided to exercise our right according to the provisions of the Electricity Regulation Act 4 of 2006 and the supply agreement with municipalities, which entitled us to disconnect the supply of electricity to defaulting municipalities.”
Top 20 defaulting municipalities
At the time that the press statement was released, Eskom stated that the following municipalities were the top 20 defaulters, who jointly owe Eskom R3.68 billion of its outstanding R4.6 billion amount owing it from municipalities.
(To see the full list of defaulting municipalities, click here.)
Justmoney contacted Eskom for comment. A spokesperson stated that the province with the most defaulting municipalities is currently the Free State.
He also pointed out that the current top five defaulting municipalities are:
· Maluti A Phofong Municipality,
· Matjhabeng Local Municipality,
· Emalahleni Local Municipality,
· Ngwate Local Municipality, and
· Thaba Chweu Municipality.
The Eskom spokesperson noted that there are several reasons why municipalities default on their payments.
These include inadequate skills and competency to manage municipal functions, poor management of revenue management processes, cash flow challenges, and the misalignment of tariffs between Eskom and the municipalities.
Eskom pointed out: “A list of defaulting municipalities will be published per province by 30 April 2015 in local provincial media channels.”
Disruption to consumers
The electricity supply to these defaulting municipalities will be cut off for four hour intervals from 6:00 to 10:00 in the morning, and 17:00 to 21:00 for week days (Monday to Friday). And from 7:00 to 10:00 in the morning, and 17:00 to 20:00 on Saturdays and Sundays.
When asked if the municipalities will be cut off simultaneously or on a roster basis during the given time slots, the Eskom spokesperson noted that the structure of the interruptions will depend on the energy shortfall requirements.
“The objective is to balance the system during constraint periods. Eskom reserves the right to interrupt municipalities to balance the system as it deems fit, hence both options are applicable,” added the spokesperson.
However, he highlighted that the municipalities that are able to pay-off their debt to Eskom prior to the end of April will be removed from the list of defaulting municipalities.
“Municipalities that have signed payment agreements and comply with terms of the agreement and those who have paid their debt in full would be removed from the list,” clarified the spokesperson.
According to the Eskom spokesperson, the long term plan to deal with defaulting municipalities is “permanent disconnection, until the debt is paid in full.”
However, Eskom noted: “Consumers within the jurisdiction of a defaulting municipality will be given adequate notice in terms of the Promotion of Administrative Justice Act, no 3 of 2000, and will be given the opportunity to make written representations to Eskom.”
The power utility goes on to add: “Eskom recognises that the disconnection of electricity supply may cause undue hardship to consumers and members of the community, and may adversely affect the delivery of other services, however, customer disconnection is always the last resort explored.”