The South African Local Government Association (Salga) has welcomed the suspension of certain definitions in the Electricity Regulation Amendment (Era) Act, which it argues could jeopardise municipalities’ ability to generate revenue.
Salga was particularly concerned about the definition of “reticulation” as outlined in the Act. Currently, there are two ways electricity is sold in the country: Eskom sells to municipalities and municipal entities, and it sells directly to its customers.
Salga stated that in the Era Act, a fundamental amendment had been made to the definition of “reticulation”, which, according to Schedule 4B of the Constitution, is an exclusive authority of local government.
It argued that this definition threatened the sole authority of municipalities to reticulate electricity, which would in turn impact their ability to generate revenue.
In August this year, President Cyril Ramaphosa signed into law the Era Act, which sets out far-reaching reforms of South Africa’s electricity sector, including the establishment of a competitive electricity market.
Salga spokesperson Sivuyile Mbambato said the association had noted the change in the definition of reticulation in the Act and warned the presidency and parliament about its impact on the ability of municipalities to continue functioning.
Mbambato indicated that Salga had informed the Presidency that the organisation was prepared to challenge this section in court, as it posed a threat to the survival of many municipalities.
A notice from the Presidency states that, in terms of section 33 of the Electricity Regulation Amendment Act, a proclamation has been issued, fixing January 1, 2025, as the date on which the Act shall come into operation, except for the amendments to the definitions of reticulation and distribution power systems in section 1 of that Act, which will come into effect on a date to be determined by the presidential proclamation in the government gazette.
In a statement, Salga said it welcomed President Cyril Ramaphosa’s decision to suspend the implementation of the definition of “reticulation”.
“While Salga has supported the structural reforms introduced by the Era Bill and participated in Parliamentary public hearings in good faith to facilitate Eskom’s unbundling and the establishment of an independent Transmission System Operator, concerns emerged during the latter stages of the bill’s processing.
“Salga discovered that a fundamental amendment had been made to the definition of “reticulation”. This new definition was not included in the original specifications of the bill nor in the public notices for comment, meaning no consultation on this matter ever took place.
“The Constitution’s original intent in allocating electricity reticulation functions to local governments includes both distribution and retail. Had the Act been fully implemented with this new definition, Salga, on behalf of its member municipalities, would have had to approach the courts for a declaratory order on the constitutional validity of the amendments.
“This course of action reflects Salga’s mandate to safeguard the executive authority of municipalities over their constitutional functions,” the organisation said.
Salga’s KwaZulu-Natal manager Sabelo Gwala further elaborated that based on the action taken by the Presidency, Salga would now lobby representatives in the National Council of Provinces to redefine reticulation.
“Salga had petitioned the president not to sign the definition into law because we are concerned that by defining electricity reticulation in a loose way, you are taking away powers and functions of the municipalities who have the exclusive rights to reticulate electricity.
“So, we support a definition whereby the rights to reticulate electricity are solely owned by municipalities, and that is why we are pleased that the president has heeded Salga’s call,” he said.