Electricity Distribution Industry in Urgent Need of Reform

Article excerpt

Readers of the Cape Times article that quoted Cape Chamber of Commerce president Jeremy Wiley on the restructuring of the electricity distribution industry (EDI) would be forgiven for thinking his views were those of a political party advancing a particular and strident view for political advantage (March 6).

Of course, the right of Wiley or the chamber to hold these views is not in dispute. Neither is the fact that the industry is characterised by high fragmentation, inadequate maintenance of networks and inequitable treatment of customers across the country, inconsistent electrification performance as well as the slow and inconsistent roll-out of free basic electricity. Restructuring of the industry is long overdue.

The restructuring of the EDI should be seen as an integral part of the process of achieving improved service delivery to all and addressing the shortcomings of the industry. Restructuring must improve service delivery by providing an affordable, reliable and efficient supply of electricity service to all customers.

Eskom Distribution and the distributing municipalities will transfer their electricity businesses to the newly-created REDs, thus ensuring economies of scale, harmonised and affordable tariffs, as well as skills development. RED ONE was established as a pilot municipal entity in Cape Town. The current dispensation, based on the Cabinet decision of October 25 2006, calls for the creation of the REDs as public entities.

The decision by the City of Cape Town to close down RED ONE was a purely a political one, which flew in the face of national policy. Had it not been closed down, it could by now be viable and functioning effectively. The decision to move from municipal to public entities is precisely to prevent this kind of decision, taken for political expediency, which is detrimental to consumers and flies in the face of a national decision.

It is common cause that the Constitution and legislation confer on municipalities - alongside Eskom - the powers and responsibilities for electricity reticulation and distribution. By virtue of this, the EDI restructuring process is currently a voluntary one.

It has dragged on for far too long and to the detriment of all concerned. It has now become imperative to introduce a mandatory dispensation, which can only be done through amendment of the relevant constitutional clauses. …