Eskom’s cry about risk of collapse of national grid rings hollow in the face; Constitutional Court of South Africa directs Eskom to supply electricity

Constitutional Court of South Africa

Constitutional Court of South Africa: A bench comprising of Unterhalter** and Mlambo, AJ., Kollapen, Madlanga*, Majiedt, Mathopo, Mhlantla, Theron and Tshiqi, JJ., held that the applicants decision was taken without following a fair procedure and resulted in the breach of several of their rights protected by the Bill of Rights: the right to life, the right to dignity, the right of access to water, the right to basic education and the right to an environment that is not harmful to health or well-being.

Factual Matrix

The matter originates from two applications filed by the applicant which were joined together before the High Court. In 2008, the applicant signed a supply agreement with Ngwathe Municipality in terms of which it would supply bulk electricity to the municipality as per the Notified Maximum Demand (NMD) and in 1981 a similar agreement with Lekwa Municipality. The municipalities were consuming electricity higher than the NMD supply levels agreed to. The applicant was supplying electricity in excess of the contracted NMD to both municipalities and charging monthly penalties from the municipalities. Despite these penalties, the municipalities have failed to pay the applicant for the electricity supplied to them and remain in serial default.

In 2020, the applicant decided to reduce the bulk electricity supply to the municipalities to the NMD levels as per the agreement. The respondents, Vaal River Development Association (Pty) Limited and Lekwa Ratepayers Association, both non-profit organisation instituted applications before the High Court on the residents' behalf. The High Court held that sufficient electricity supply is inextricably intertwined with the rights to healthcare, food, water and social security and the Court directed the applicant to restore the maximum electricity load supply to the earlier levels, pending final adjudication. Aggrieved by the impugned order passed by the High Court, the applicant sought leave to appeal before the Supreme Court of Appeal.

Applicant's Submissions

The applicant contended that an order to compel it to supply sufficient electricity to the municipalities is at odds with this Court's decision in Mazibuko v. City of Johannesburg [2009] ZACC 28, where it was held that S. 26(2) of the Constitution stipulates that the State must take reasonable legislative and other measures progressively to realise the right of access to adequate housing within its available resources.

The applicant contended that in some instances the NMD was exceeded because of illegal connections, and it has no obligation to supply electricity to meet illegal demand. The applicant further contended that supplying electricity above the contracted levels is putting a strain on the infrastructure and on applicant's network.

While relying on New National Party of South Africa v. Government of the Republic of South Africa [1999] ZACC 5, the applicant stated that fault must lie with the municipalities for failing to carry out their duties. Moreover, interruptions are resulting from municipality's poor planning and the applicant is still supplying electricity but in accordance with the contracted NMD.

The applicant contended that S. 30 of Electricity Regulation Act (ERA) calls for internal remedies to resolve such dispute and hence the High Court had no jurisdiction to hear the matter without remedies of ERA having been exhausted.

Respondent's Submissions

The respondents jointly argued that the applicant had not raised a Constitutional issue therefore, this Court does not have jurisdiction to entertain the application.

Relying on Joseph v. City of Johannesburg [2009] ZACC 30, the respondents contended that the applicant cannot reduce or interrupt the supply of electricity by relying on a contractual right it has against a municipality, without engaging the affected residents. It was submitted that the supply agreements exist between state organs, but the agreements impact the residents and the residents do not seek to enforce contractual rights, but instead seek to enforce their public law rights. The respondents further contended that the Applicant in the case has supplied the Municipalities with excess electricity for an extended period but is now refusing to alter the agreements to include such high demands.

Majority View

The Court observed that the reduction decision was taken without following a fair procedure, which is impermissible in terms of Promotion of Administrative Justice Act (PAJA) and such action had an adverse impact on the residents and has resulted in the breach of several of their rights protected by the Bill of Rights: the right to life, the right to dignity, the right of access to water, the right to basic education and the right to an environment that is not harmful to health or well-being.

The Court observed that pending the determination of the proposed PAJA review of the applicant's actions, the residents of both the municipalities must be given interim relief which directs the applicant to restore electricity supply to what it was before the reduction.

The Court opined that the applicant is an organ of State and bears a higher duty “to respect the law, to fulfil procedural requirements and to tread respectfully when dealing with rights… It must do right, and it must do it properly”.

The Court observed that the applicant is free to act in terms of S. 21(5) of ERA, but it must also act in accordance with the law and the Constitution which includes compliance with PAJA.

The Court observed it can be clearly seen that several constitutional rights of the residents were infringed as a result of the decision of the applicant and without the interim relief such infringements would have continued unabated. Moreover, the balance of convenience favours the residents; and, accordingly, would have the residents’ living lives that are as near as possible to wholesome, then subject them to the current “human catastrophe” on an interim basis.

“On balance and without any hesitation, I conclude that the balance of convenience certainly favours the residents. Who would want to be subjected to this “human catastrophe” (e.g. to drink and use water contaminated with faecal matter and generally not cleaned properly even absent the faeces-related problem) whilst a review is winding its way through our court system?”

The Court observed that the applicant's reliance on risk of collapse of the national grid is nothing but a subterfuge as the applicant did not fear a risk of the grid collapsing if the supply to the two municipalities was not reduced.

Dismissing the appeal, the Court held that the residents satisfied all the requirements for an interim relief.

Minority View

Disagreeing with the majority judgment, the Court observed that there is no reason before the court to not decide the legal question and dismiss the application, if an application is premised upon an incorrect point of law. The Court observed that the question of law in this case is whether the residents have a right to the supply of electricity from the applicant, and hence whether the Associations have prospects of success in the review.

The Court observed that the majority judgment failed to consider the question whether the applicant owes a duty to the residents to supply them with the electricity and such failure resulted in unsustainable legal conclusion and reasoning of the majority judgment.

The Court stated that he right of the residents to claim electricity from the applicant is not a claim that stands apart from the rights in the Bill of Rights they relied upon. If that claim forms no part of the contents of the rights that the residents invoke, then they have no claim in law deriving from these rights.

Acknowledging the harm suffered to by the residents, the Court observed that the majority judgement failed to take account of the true source of the problem, the municipalities.

The Court observed that it would have granted leave to appeal and upheld the appeal in both applications.

[Eskom Holdings SOC Ltd. v. Vaal River Development Assn. (Pty) Ltd., [2022] ZACC 44, decided on 23-12-2022]

* Majority Judgment by Justice Madlanga

** Minority Judgment by Justice Unterhalter

Advocates who appeared in this case :

S Shangisa SC and L Rakgwale, Counsel for the Applicantl;

H van Eeden SC and DH Wijnbeek, Counsel for the Respondents.

*Ritu Singh, Editorial Assistant has put this report together.

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