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[2017] ZAGPPHC 63
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Afriforum NPC and Others v Eskom Holdings and Others (99984/2015) [2017] ZAGPPHC 63 (5 January 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT. PRETORIA)
CASE
NO
: 99984/2015
DATE
:
2017-01-05
Reportable:
NO
Of
interest to other judges: NO
Revised.
In
the matter between
AFRIFORUM
NPC +
3 Applicants
and
ESKOM
HOLDINGS PLUS
OTHERS Respondents
JUDGMENT
FABRICIUS
J:
The
Applicants in this urgent application, seek the joinder of the 14th
to the 27th Respondents in the main application, which will
be heard
by this Court on 22 and 23 March of this year, and obviously, they
seek a joinder in the present application as well.
These Respondents
are all municipalities and their manager in the Free State.
Applicants seek an order that the First Respondent
be interdicted and
restrained from terminating the electricity supply to these
Respondents, pending the finalisation of the main
application which
could, of course, also involve appeals in that application.
2
The
Third- and Fourth Applicants play no role in the present proceedings
before me. In essence, the Applicant's case is that Eskom's
Intended
termination of services on 5 January of this year will cause innocent
consumers of electricity irreparable harm inasmuch
as they have a
constitutional right to electricity, and that Eskom's intended
termination of electricity to the relevant municipalities
is
unlawful.
Eskom
disputes that this application is urgent. It denies that the
Applicants have
locus standi
in these proceedings and
furthermore state that it is acting lawfully in terms of the
Electricity Regulations Act 4 of 2006, and
also In terms of various
written agreements for the supply of electricity entered into with a
number of the Respondents, or intended
Respondents.
Furthermore,
it states that it has given sufficient notice of its intention and
has also, although It is not obliged to do so, followed
the least
intrusive route vis-a-vis the public in that it has structured the
Interruption of electricity from 06h00 in the mornings
to 08h00 and
17h00 In the afternoon to 19:30 during the week, and during weekends
from 08h30 until 11h00 and 15h00 to 17h30. No
review of this decision
has been launched. It is also common cause that no provisions of the
Bill of Rights have been raised in
these proceedings. The relief
sought in the main application is of importance. As I have said, this
would be heard in March and
it is the following:
3
1.
Prayer 1. It is
declared that the First Respondent Is not entitled as a debt
collection and credit control measure, to interrupt
electricity
supply to any local authority, resulting in the interruption of
electricity supply to the towns and/or points of electricity
supply
between the jurisdiction areas of the local authority. I may just add
at this stage that I am quoting from the Notice of
Motion.
2.
Prayer 2. That it is
declared that the First Respondent is obliged to submit its disputes
regarding non-payment of bulk electricity
supply of local
authorities, to arbitration. Alternatively, mediation in front of the
Eighth Respondent. I may just add, the Eighth
Respondent is a
National Energy Regulator.
3.
Prayer 3. That the
final interdict be granted in terms whereof the First Respondent be
interdicted and restrained for interrupting
the electricity supply to
the Second Respondent (resulting in the interruption of electricity
supply to the towns and/or points
of electricity supply within the
jurisdiction area of the Second Respondent) as a debt collecting and
credit controller.
4.
Prayer 4. That the
final Interdict be granted in terms whereof the First Respondent be
interdicted and restrained from interrupting
the electricity supply
to any local authority (apart from the Second Respondent), resulting
in the interruption of electricity
supply to the towns and/or points
of electricity supply within the jurisdiction area of any local
authority (apart from the Second
Respondent), as a debt collection
and credit control measure."
4
It
is clear that, in the main application, this Court will have to
decide whether or not the Applicants have the necessary
locus
standi
to act on behalf of the affected consumers, and whether
First Respondent was acting lawfully in terminating services of a
municipality
or limiting such. It is undesirable that I make any
findings in this regard at this stage. It is, however, common cause
that no
consumer has any contract with Eskom, but would have a
contractual relationship with a municipality.
Eskom,
in turn, has written agreements in place with the municipalities
which entitle it to terminate the supply of electricity,
upon
non-payment of charges. It does not supply electricity to any
individual member of the public, referred to in these proceedings.
As
in all other proceedings, it is necessary to keep the proper and
accurate context in mind. Eskom, in his Answering Affidavit,
sets out
the objective facts relating to the issuing of the main application
on 15 December 2015 and the subsequent urgent application
of 29
January 2016 which coincidentally, also served before me.
I
will read from paragraph 26 to 33, and 36 of the Answering Affidavit.
26.1.
The Applicants' case
is predicated on the pending hearing of the application (declarator
application) they launched on 15 December
2015 under case 99924/15.
This was against the background that almost 90% of the municipalities
were in arrears with the electricity
bill to Eskom.
27.
In that application,
they sought,
inter
alia,
a
declarator as at Eskom;
27.1.
Who was not entitled
as a debt collection and credit control measure, to interrupt the
electricity supply to any local authority
and;
27.2.
Was obliged to
submit, as this is, regarding non- payment of electricity supply by
local authorities, to arbitration, or alternatively,
mediation to the
National Energy Regulator.
5
28.
Whilst this matter
was pending and before the filing of papers was completed on 29
January 2016, the Applicants launched an urgent
application to
interdict Eskom from interrupting power supply to Kamiesberg in
Thembalethu Local Municipalities, pending the hearing
of the urgent
application.
29.
The order that the
Court granted then was that Eskom was to file its Answering Affidavit
to the urgent application, by 14h00 on
2 February 2016. The
Applicants then to file a reply by 14h00, 3 February 2016. The Court
went further to note that Eskom had undertaken
not to disconnect the
aforesaid municipalities between 29 January 2016 and the date of
filing its Answering Affidavit to the urgent
application. That
application was postponed
sine
die.
It is clear
from the actual Court Order that was made on 29 January 2016 that the
undertaking that was given in respect of the particular
Respondents,
was only of effect between now – that was that particular date
- and the filing of the Answering Affidavit.
There was obviously no
undertaking in respect of any of the Respondents that electricity
would not be connected at any stage, or
for any reason.
6
30.
The urgent
application was not proceeded with.
31.
Instead, Eskom filed
its Answering Affidavit to the declarator application on 17 February
2016. The Applicants filed their Replying
Affidavit to the declarator
application and the joinder application of further Applicants and
Respondents on 15 March 2016. I may
just add at this stage - as I
pointed out during argument - that I am now faced, on an urgent
basis, with another application for
joinder.
32.
The Applicants'
Heads of Argument were only concluded on 5 August 2016 and received
sometime between on or about 8 August 2016,
close to five months
after the filing of the Applicants' Replying Affidavit.
33.
Eskom's Heads of
Argument were filed during the week ending 9 September 2016, four
weeks after receipt of the Applicants' Heads
of Argument. The facts
contained in these paragraphs, are not disputed and they do point one
in the direction of the question whether
or not these proceedings are
urgent.
7
I
will leave that there for a moment and continue to read paragraph 36
of the Answering Affidavit.
36.
This eventually
resulted in the fixing of the current hearing dates of 22 to 23 March
2017."
Eskom's
case is also referred to in some detail in the Answering Affidavit
and it is convenient to me for present purposes, to read
from these
paragraphs and I read from paragraph 38:
38.1.
Eskom's case. Eskom
is authorised by the Electricity Regulation Act 4 of 2006 to reduce
and/or terminate the supply of electricity
to a customer like a
municipality, if that customer contravenes its payment conditions to
Eskom.
38.2.
The payment
conditions which echo the provisions of Section 21(5) of the Act and
the terms relating to them, are contained in various
written
agreements for their supply of electricity entered into by Eskom,
with each of the 14th, 16th, 1ath, 20th, 22"d, 24th
and 26th
Respondents, all duly represented. It is a material term in each of
these contracts that, in the event of non-payment
of electricity
charges, by any municipality, after the expiry of a period of 14 days
from receipt of a written notice .of demand,
Eskom would require the
right to terminate the supply, of electricity.
8
38.3.
It is Eskom's
intention initially to implement what the term 'scheduled
interruption of electricity supply to the affected municipalities
between the hours that I have already mentioned.
38.4.
The proposed planned
interruption of electricity, despite Eskom's rights to completely
terminate the supply is, in my view -
and
that, of course, the author of the Answering Affidavit -
38.4.
less burdensome to
the communities of the municipality and other affected
municipalities. It was further planned in such a way that
people
affected will schedule their lives, taking into account the five
hours out of 24 when there would be no electricity while
minimising
the rate at which the debt of the municipality escalates, without
making it impossible for the municipalities to meet
their obligations
in the future. In so saying, Eskom has not abandoned its rights in
terminating the supply of electricity supplied
totally, where
circumstances so require.
38.5.
The Applicants'
constitutional rights to access to electricity, which are only
enforceable against the municipality, are to the
extent that Eskom is
involved in the supply of electricity to the municipality, limited by
the contract the municipality entered
into with Eskom and also via
Section 21(5) of the act above-mentioned.
9
38.6.
It appears from
paragraphs 26 to 34 of the Founding Affidavit to the declarator
application, that applicants knew of the failure
by various
municipalities to pay their Eskom account and/or Eskom's intent to
terminate the supply of electricity for non-payment,
at least since
April 2015, and yet they failed to take any actions to either review
Eskom's proposed decision, or seek appropriate
relief against the
municipalities, in terms of the Act, or by them taking a mandamus
that it complies with its obligations to pay
to Eskom its electricity
account."
That
is the end of the reference to the Answering Affidavit. I continue
with my judgment. Eskom also describes its role in the national
economy in some detail and it is again necessary for a proper
appreciation of my order in these proceedings and I am referring
to
paragraphs 48 to 55 and 57 to 61 of the Answering Affidavit. I
proceed from paragraph 48.
48.
“
Eskom is a
major public entity and an organ of state provided for In Schedule 2
of the Public Finance Management Act 1 of -1999.
Its main source of
business is the generation, transmission and distribution of
electricity in bulk within the Republic of South
Africa and
neighbouring countries. It conducts this business under authority of
licences granted by the National Electricity Regulator
of South
Africa.
10
49.
It needs mention
that the licenced condition stipulate that. Eskom shall only supply
to the class of customers within a designated
area and charge such
customers and/or end users' tariffs and prices that are approved by
the Regulator. In addition, the Regulator,
in setting and/or
approving the aforesaid prices, charges and tariffs, makes provisions
that the licensee will operate on an efficient
basis and be able to
cover the full costs of its licenced activities within a reasonable
margin, or return. Eskom thereafter concludes
electricity supply
agreements with its customers, whose form and content are required to
have been preapproved by the regulator
in terms of the Act.
50.
Eskom is also
legally bound by Sections 51(1)(b)(i) of the Public Finance
Management Act, to take effective and appropriate steps
to collect
all revenue due to them. In the event of non-payment of the amounts
of electricity supplied, Eskom has a residual right
in terms of the
agreements and Section 51(5) of the Act, to terminate the supply of
electricity to a defaulting municipality, subject
to compliance with
the procedural fairness.”
11
Paragraphs
51 to 61 read as follows:
'The
14th, 15th, 18th, 20th, .22nd, 24th and 25th Respondents are local
municipalities established in terms of Section 2 read with
Section
3(d)
of the
Local Government Municipal Systems Act 32 of 2000
. In
terms of Section 152(1) of the Constitution, municipalities must
ensure the provision of services to the communities within
their
areas of jurisdiction, in a sustainable manner. They must also strive
within their financial administrative capacity, to
achieve their
objectives set out in Section 152(1) of the Constitution. This
Section provides as follows:
The
municipality, like the Respondents, must structure and manage its
administration and budgeting and planning processes, to give
priority
to the basic needs of the community and 10 promote the social and
economic development of the community and to participate
in national
and provincial development programs.
12
60.
Section 4(2) of the
Systems Act .is registered with content to the various constitutional
communities of the municipalities, by
setting out the duties of
municipal councils, which exercise the executive and legislative
authority and municipal burden. In particular,
Section (4)(2)(f)
provides as follows:
"The
council of a municipality within the municipality's financial and
administrative capacity and having a large and practical
consideration, has the duty to give members of the local community
equitable access to the municipal services to which they are
entitled."
The
further content to this general duty to provide municipal services is
found in Section 73 of the Systems Act. It obliges the
Respondent
municipalities to give priority to the basic needs of the local
community, promote its development and to ensure that
all members of
the local community have access to, at least, the minimal level of
basic municipal services which include electricity."
The
duties of the municipalities are important in the present context and
I also refer to in some detail again the Answering Affidavit,
and I
have referred to the most important ones. It is also not an issue
that Eskom has engaged with various municipalities and
other
stakeholders since 2011, in an attempt to recover what is due to it.
During April to May 2015 and again in February 2016,
various
Respondents, or intended Respondents, signed acknowledgment of debts
and agreed upon a repayment plan. It was also agreed
that, in the
event of a default, disconnection of the supply of electricity could
result. Applicants were aware of the default,
but took no action
against any municipality.
13
On
31 October 2016, Eskom placed the municipalities on terms and also
issued notices to the public on 14 November. It received
representations and on 22 December 2016, published notices of its
intention to interrupt the supply of electricity by way of a
specified structure that I have already referred to. It states that
its intention behind this load shedding was to conserve electricity.
Absent a decision to complete the shutdown of electricity, the
planned interruption is rational and the least invasive.
Applicant's
Counsel, Mr A. Louw SC, nevertheless submitted that its decision
remained irrational and and would serve no purpose.
As I have said,
there is no review of its decision based on irrationality. Mr. Louw
added that, absent any solution, all that was
left was
'inconvenience'. I agree that there will be inconvenience and Eskom
admits this and in fact refers to this topic in its
notices to the
public.
I
must weigh up this submitted inconvenience versus Eskom's statutory
obligations and the national economic interest that I have
referred
to. Billions of rands are due to them. There are 10 municipalities
which owe about R10 billion. The top 20 owe R7.4 billion.
74 of them
are overdue by more than R10 million each and 99 are overdue by more
than R500 000. In this context, Eskom puts its
provision as follows,
and it is again convenient to refer to the Answering ·Affidavit
and the facts given therein and I
proceed from paragraph 93 of the
Answering Affidavit:
14
"Eskom
borrows money to fund capital projects necessary to ensure the
realisation of the right to electricity at a huge cost.
Were it
unable to continue to recover electricity charges, there will be an
ongoing need to borrow additional money at an unaffordable
cost, to
fund operational costs. Operational costs should ideally be funded by
revenue from electricity charges. Not RA's. RA money
at no cost, to
fund operation or requirements, would not be sustainable in the
short-, medium-, and long term and could increase
the cost of
generating electricity exponentially to the detriment of the general
populus."
I
quote from paragraph 94.
"Eskom's
inability to recover electricity charges would also mean that Eskom
is faced with the risk of having to write off
an additional R1.2
billion by the end of this financial year. This, coupled with the
current low recovery rate, will have a negative
impact on Eskom's
financial performance. A good credit-standing is a prerequisite to
accessing much sought after financial markets
for funding, especially
now that Eskom intends to go the nuclear route."
The
requirements for an urgent interim interdict have been fully debated
in Courts, over decades, and were again fully dealt with
in another
application involving the Applicants, and therefore I presume they
would have knowledge of what was said there. I refer
to Afri-Sake v
City of Tshwane and others 74129/2013, delivered on 14 March 2014 and
the case law referred to therein in some detail.
15
For
present purposes I should again repeat that the Applicants must show
the right to which, if not protected by an interdict, irreparable
harm would ensue. None of the Applicants' own rights are affected.
The rights of consumers, assuming that they exist vis-a-vis
Eskom,
cannot rise above those of the relevant national interest. Eskom has
exercised its legislative rights and the question of
whether this is
lawful, will be decided by this court in March of this year. A strong
case must be made out when an interdict is
sought against the
exercise, or statutory powers. This is not the case here. It is also
not in issue that the Court has a discretion
whether or not to grant
the interdict when all the requirements are present. See the
Afri-Sake
supra
paragraph 10.
On
that basis also, in the light of the considerations that I have
referred to in some detail, and especially the role of Eskom
in the
national economy, I exercise my discretion against the Applicants.
The municipalities ought to be held accountable, in my
opinion, but
this Court will finally decide that issue in March of this year.
It
is noted that, during the argument, Eskom undertook not to limit
servic.es as envisaged in these proceedings, until 9 January
2017.
The
following is the result:
The
application is dismissed with costs, including costs of two Counsel.