Eskom ‘should absorb’weak municipal distributors
WEAKER municipalities which distribute electricity should be incorporated into power utility Eskom, according to Accenture executive Ken Robinson.
The poor state of SA’s electricity distribution industry has been a contentious subject for a long time now, with allegations that licensed distributors — especially municipalities — are not investing enough in infrastructure. Old distribution assets are as much of a threat to the security of the electricity supply as insufficient power generation. Eskom and about 180 municipalities are licensed to distribute electricity.
In a submission to Parliament on the electricity distribution industry, Mr Robinson said incorporating the weaker municipali- ties would address “financial, technical and safety issues”. He said weaker municipal distributors were failing to achieve national priorities such as universal access, free basic electricity, New Growth Path commitments and electricity service delivery.
“We propose that (the National Energy Regulator of SA) identifies annually those municipal electricity distributors least able to meet regulated standards and, in consultation with provincial governments, cancels the distribution licences of such municipalities.” The municipality would be required to identify an alternative service provider, he said.
“Simultaneously, Eskom will be instructed by its shareholder to provide a common platform to permanently absorb the functions, customers, assets, employees and obligations of the iden- tified electricity distributors for those municipalities which choose Eskom as their service provider.
“Eskom will indicate the number of absorptions that it can successfully complete in any year and the regulator’s actions will be aligned to this capability. We recognise that such actions may have to be enabled legislatively.”
The portfolio committees on energy and co-operative governance and traditional affairs have invited “institutions, organisations and interested individuals” to make submissions on the “possible” restructuring of the distribution industry.
However, according to the Department of Energy, the call does not reopen the industry’s redistribution process. The department said its focus was to address the shortcomings in the electricity distribution industry “not on (electricity distribution industry) restructuring”. This was done according to the implementation of a multi phased programme known as the Approach to Distribution Asset Manage- ment (ADAM) — “a multi-year service delivery improvement initiative” aimed at addressing maintenance, refurbishment and reducing network backlogs.