Municipalities have accused Eskom of offering large industrial users better rates than them.
On the second day of the parliamentary energy committee’s hearings on the electricity distribution industry, municipal representatives complained that when Eskom took over, or started, the supply of electricity directly to households, local governments lost revenue they needed to fulfil responsibilities of providing services according to the constitution.
The service delivery failure prompted communities to complain to their councillors and expected the municipalities to solve the problem.
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"Eskom moved into my area (of municipal electricity supply) and then had the audacity to make a R12-billion profit and they don’t have to build roads, clinics and parks that the local community demand," said Leon Kritzinger, executive manager of Mangaung municipality’s electricity supply division, Centlec.
Mr Kritzinger complained that Eskom tended to treat municipalities as just another bulk customer, such as a mine or a large industrial company, but then did not pass on the bulk savings.
The energy regulator, which also approved municipal tariffs, did not allow them to raise their prices as high as Eskom, thus leading to an overall loss.
The hearings are being held to find a solution to the vacuum left after the Cabinet dissolved EDI Holdings, the state-owned entity that was supposed to control electricity distribution and create regional electricity distribution companies that would have been provincially focused.
The distribution system is shared between Eskom and 180 municipalities. Of those, 12 are large and mini metropolitan areas - such as Cape Town, Johannesburg and Buffalo City - which supply electricity to an estimated 80% of the population.
Deon Louw, a former GM at EDI Holdings, said the average age of the electricity distribution system was 47 years, just three years short of its expected life span of 50 years. He said about R6,5-billion was needed annually just for maintenance and refurbishment, but only about 55% of that was actually being spent.
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