The AMEU was recently approached for comment by the Treasury Department of a member municipality regarding some communication they had apparently received from NERSA. This followed some media reports (radio and internet, at least) on warrants being issued for the arrest of the municipal manager, the mayor and the financial head of Umsobomvu Municipality in Colesberg in the Northern Cape because they apparently ignored a court order prohibiting the practice of disconnecting consumers' electricity because payments for other services were overdue. In one article, NERSA is quoted as saying that “...it is illegal to withhold electricity from consumers because of other arrear accounts, and it is also a violation of municipalities’ licensing [sic] conditions as distributors of electricity”.
The [undated] communication to the municipality mentioned above, reputed to be from Ryna Boshoff, Media Relations Practitioner at NERSA, also claims:
“It is illegal for municipalities to disconnect electricity in order to recoup rate arrears. Municipalities are establishments of statute (Constitution of the Republic of South Africa Act, 1996 (Act No. 108 of 1996)). The same statute recognises that the operation of municipalities will be based on national legislation to regulate executive authority provided for in section 156 of the Constitution. The Constitution empowers the municipalities a legislative mandate to make by-laws. The Constitution went further to provide that where any by-law or provincial legislation is in conflict with national legislation, such a by-law or provincial legislation is invalid as long as the national legislation is operational.
Amongst the legislations that regulates the powers of municipalities provided by the Constitution is the Electricity Regulation Act, 2006 (Act No. 4 of 2006). The Electricity Regulation Act, 2006 (Act No. 4 of 2006) provides for circumstances under which electricity can be reduced or discontinued. However electricity cannot be reduced/ disconnected if a customer is in arrears with regards to other accounts (i.e. rates, water).
The Electricity Regulation Act, 2006 (Act No. 4 of 2006) provides for the National Energy Regulator of South Africa (NERSA) to issue conditions when granting a licence or when amending the licence. Compliance by a licensee is not limited to the licence conditions issued, also to the Electricity Regulation Act, 2006 (Act No. 4 of 2006).
Whenever a licensee violates the licence condition issued or acts in violation of the Electricity Regulation Act, 2006 (Act No. 4 of 2006), on receipt of complaint or at its own instance NERSA may bring the violation to the licensee to remedy the violation and if the violation is not remedied, the Energy Regulator may dispense with the matter. A variety of conclusions on dispensing with the matter are made available to NERSA i.e. Impose a fine of R2 000 000 a day or 10% of the annual turn over or revocation of the licence”
The media report was referred to the Treasury Department of a Metropolitan Municipality who commented, inter-alia, as follows:
“In terms of Section 102 of the Municipal Systems Act (MSA), a Municipality is entitled to consolidate any separate accounts of persons liable for payments to the Municipality; credit a payment by such a person against any account of that person; and implement any of the debt collection and credit control measures provided for in Chapter 9 of the MSA in relation to any arrears on any of the accounts of such a person.
However, in order to give effect to Section 102, each municipality must pass a credit control policy and promulgate bylaws empowering it to consolidate, credit the accounts and disconnect services.
We have a High Court judgment in our favour where the Honourable Justice had accepted section 102 of the MSA and our bylaws. The court allowed us to consolidate separate accounts of a customer and disconnect services for nonpayment of any account.”
In the case of Kopanong Municipaliteit, another High Court judgment had allowed the Municipality to with-hold the sale of pre-paid electricity cards to customers who were in arrears with their water and rates accounts. The municipality had in place a credit control policy and promulgated bylaws.
With respect to the Electricity Regulation Act, each municipality will have to look at its conditions of licence. When we went to court on the consolidation issue, provisions of the Electricity Act were argued and dismissed.
I'm not certain what NERSA means by “Municipal regulations are subservient to national legislation and cannot legalise the with-holding of electricity.” The Municipal Systems Act [MSA] is national legislation.
If (an) interdict is in place and the municipality acts contrary to a court order, then the court may issue a warrant of arrest for the municipal manager for contempt of a court order. The article makes it seem as though the warrant is issued for the practice of consolidation and disconnection of services. This is certainly not the case.
Municipal members may wish to raise these comments with their Treasury Departments to ensure that their municipality has a credit control & debt collection policy that has been passed by their council as well as bylaws that have been properly promulgated. This will empower them to consolidate any account of the customer and disconnect services for nonpayment of any account. Other High Court decisions are apparently available to support this municipal position.
Comments or queries may be submitted to Peter Fowles at pf15@mweb.co.za