Dis­con­nect­ing elec­tric­ity over un­paid rates il­le­gal, says Nersa

Mu­nic­i­pal­i­ties face fines of R2 mil­lion a day or re­vo­ca­tion of li­cence

Weekend Argus (Saturday Edition) - - NEWS - CARVIN GOLD­STONE and LEILA SAMODIEN

MU­NIC­I­PAL­I­TIES that “black­mail” ratepay­ers into pay­ing ar­rears rates and other ac­counts by threat­en­ing to dis­con­nect their elec­tric­ity are break­ing the law and face mas­sive penal­ties.

They face a fine of R2 mil­lion a day or 10 per­cent of their an­nual turnover or worse, re­vo­ca­tion of their elec­tric­ity dis­tri­bu­tion li­cence for their ac­tions.

This is the strong warn­ing from the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) fol­low­ing com­plaints from across the coun­try that mu­nic­i­pal­i­ties are hold­ing guns to their cus­tomers’ heads over ar­rears in rates and wa­ter bills. Even pre-paid cus­tomers have been dis­con­nected.

“It is il­le­gal for mu­nic­i­pal­i­ties to dis­con­nect elec­tric­ity to re­coup rate ar­rears,” said Nersa spokesman Charles Hle­bela.

The prac­tice is wide­spread, and in­cludes the met­ros of Cape Town, Dur­ban, Jo­han­nes­burg and Pre­to­ria.

At is­sue is the fact that while the na­tional Elec­tric­ity Reg­u­la­tion Act for­bids the prac­tice, mu­nic­i­pal by­laws around the county per­mit it. Nersa ar­gues that in terms of the Con­si­tu­tion na­tional laws take prece­dence over mu­nic­i­pal by­laws in a con­flict.

The City of Cape Town’s di­rec­tor of rev­enue, Trevor Blake, ac­knowl­edged that the city did cut off or re­strict ratepay­ers’ ser­vices such as elec­tric­ity and wa­ter if their other ac­counts were in ar­rears, but main­tained it was com­pletely le­gal.

This occurred in cases where ratepay­ers had a con­sol­i­dated bill – a billing sys­tem that com­bined all the ratepayer’s ac­counts.

“The suc­cess of the City of Cape Town’s debt man­age­ment ini­tia­tives and the fact that it has one of the high­est col­lec­tion ra­tios for any mu­nic­i­pal­ity in the coun­try is premised on the fact that the city views a ratepayer’s debt holis­ti­cally,” said Blake.

“If, for ex­am­ple, ratepay­ers have out­stand­ing rates but all their ser­vices ac­counts are up to date, the city can dis­con­nect their util­ity ser­vices as per the Mu­nic­i­pal Sys­tems Act and the City of Cape Town’s Credit Con­trol and Debt Col­lec­tion Pol­icy.”

Nersa, how­ever, says the Elec­tric­ity Reg­u­la­tion Act, 2006 pro­vides for cir­cum­stances un­der which elec­tric­ity can be re­duced or dis­con­tin­ued but th­ese do not in­clude de­fault­ing on other mu­nic­i­pal ac­counts.

If Nersa’s in­ter­pre­ta­tion of the law is cor­rect then many elec­tric­ity cus­tomers, in mu­nic­i­pal­i­ties across the coun­try, in­clud­ing Cape Town, have been il­le­gally dis­con­nected.

Nersa has asked that cus­tomers who have had had their elec­tric­ity dis­con­nected for other out­stand­ing ac­counts lodge a com­plaint with Nersa’s cus­tomer ser­vices.

In a test case in Coles­berg in the North­ern Cape, the Coles­berg Action Group has taken the lo­cal mu­nic­i­pal­ity to court af­ter five peo­ple had their pre­paid elec­tric­ity dis­con­nected be­cause they had wa­ter and rates ar­rears.

The action group’s Jo­han Matthee said: “This mat­ter is still un­der de­bate in our court.

“The met­ros/mu­nic­i­pal­i­ties pro­mul­gate by-laws al­low­ing them to act in this man­ner. How­ever, if one stud­ies the Elec­tric­ity Reg­u­la­tion Act it clearly state that the lo­cal au­thor­i­ties are act­ing il­le­gally.”

In this case, war­rants of ar­rest have been is­sued for the mu­nic­i­pal man­ager, mayor and the trea­surer of the Um­sobomvu Mu­nic­i­pal­ity be­cause they al­legedly ig­nored a court or­der stop­ping them from dis­con­nect­ing cus­tomers.

Like Um­sobomvu, the eThek­wini Mu­nic­i­pal­ity in Dur­ban is re­ly­ing on Sec­tion 102 (1) of the Mu­nic­i­pal Sys­tems Act and the Dur­ban Ex­tended Pow­ers Con­sol­i­dated or­di­nance, No 18 of 1976 for its “au­thor­ity to cut off the sup­ply of elec­tric­ity to wa­ter ser­vice or both if the amount re­flected in the con­sol­i­dated ac­count is not paid”.

The mu­nic­i­pal­ity’s debt col­lec­tion poli­cies al­lo­cate pri­or­i­ties in the pay­ment of bills. Mon­eys paid go to ar­rear ac­counts first and then to cur­rent ac­counts.

Elec­tric­ity is al­ways paid last. Should a cus­tomer fail to pay the full amount due for the con­sol­i­dated bill, the elec­tric­ity ac­count is deemed un­paid and dis­con­nected.

Blake said the City of Cape Town also had the right to take such action against ratepay­ers; how­ever, it of­fered a num­ber of op­tions to peo­ple who could not af­ford to pay their debts.

“If any­one gets dis­con­nected, that means they never came to ac­cess the ben­e­fits of­fered by the city. If they don’t qual­ify for those ben­e­fits, we can still give them an af­ford­able ar­range­ment to pay off their ar­rears.”

But a leader of the Greater Cape Town Civic Al­liance, Philip Bam, said dis­con­nec­tion was a prob­lem, es­pe­cially in the case where ratepay­ers had a dis­pute with the city over their ac­counts.

“It’s a prob­lem, and one that the al­liance plans to dis­cuss. It makes you won­der whether what the city is do­ing is le­gal.”

Like Cape Town, the eThek­wini Mu­nic­i­pal­ity also be­lieves its action is le­gal.

The city’s head of in­come Louis Kruger says: “Ethek­wini’s pay­ment con­di­tions are set out in our Credit Con­trol and Debt Col­lec­tion Pol­icy doc­u­ment and in our by­laws.

“Th­ese are very clear – if any por­tion of the ac­count, in­clud­ing rates, re­mains un­paid, we may dis­con­nect the elec­tric­ity ser­vice.”

He said sec­tion 102 of the Mu­nic­i­pal Sys­tems Act was also clear.

“In terms of this Act a mu­nic­i­pal­ity may credit any pay­ment by a debtor against any ac­count of that debtor, and a mu­nic­i­pal­ity may im­ple­ment any of the debt col­lec­tion and credit con­trol mea­sures pro­vided for in the Act, which in­cludes the dis­con­nec­tion of ser­vices.”

Nersa replied: “Such a by­law or pro­vin­cial leg­is­la­tion is in­valid as long as the na­tional leg­is­la­tion is op­er­a­tional.”

Now a KwaZulu-Natal woman, Lil­ian Devel­ing, chair of the Con­fed­er­a­tion of Mist­belt Ratepay­ers and Res­i­dents As­so­ci­a­tions, has lodged a for­mal com­plaint with Nersa against the eThek­wini Mu­nic­i­pal­ity for cut­ting off elec­tric­ity ser­vices.

Devel­ing said the eThek­wini Mu­nic­i­pal­ity was dis­con­nect­ing be­tween 14 000 and 16 000 cus­tomers a month.

In many cases dis­putes had arisen be­tween the mu­nic­i­pal­ity and cus­tomers af­ter their prop­er­ties had been reval­ued and their rates in­creased.

But Kruger said they did not dis­con­nect cus­tomers where there is a le­git­i­mate dis­pute.

“If a le­git­i­mate dis­pute is de­clared in re­spect of their ac­counts, then we must re­solve that first be­fore dis­con­nect­ing.”

Mathee said Nersa had al­ready warned a num­ber of mu­nic­i­pal man­agers (in­clud­ing Coles­berg) that their ac­tions were il­le­gal “but it seems they re­gards them­selves as above the law”.

Kruger said they had not been con­tacted by Nersa about the dis­con­nec­tions, but “Nersa would have to go to court” to chal­lenge their ac­tions.

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