Eskom has won a court challenge against its right to interrupt or terminate electricity supply to non-paying or defaulting customers.
Pioneer Foods had challenged Eskom’s 2018 decision to interrupt electricity supply to Walter Sisulu Municipality in the Eastern Cape.
The municipality, which hosts a Pioneer Foods production plant, had failed to pay Eskom in terms of their agreement.
Pioneer Foods contended that Eskom’s decision to implement electricity interruptions was irrational and unlawful, and asked the court to set it aside.
However, the Johannesburg high court ruled on Tuesday that the company does not have legal standing in the electricity supply agreement between Eskom and Walter Sisulu Municipality.
The court also ruled that the interruptions were “necessary” for Eskom’s survival because it could not be expected to continue electricity supply to non-paying customers.
It further ruled that Pioneer Foods had an option of approaching the National Energy Regulator of SA (NERSA) first before filing the legal challenge.
The court therefore dismissed Pioneer Foods’ application with costs, a decision Eskom welcomed in a statement on Wednesday.
It said, “Eskom welcomes this landmark judgment, as the court has set the important legal principle that Eskom is only obliged to supply electricity to paying customers.
“The Electricity Regulation Act of 2006 entitles Eskom to interrupt electricity supply to a non-paying customer and in this matter Eskom had taken proper preliminary steps and due process which did not entitle the applicant to the interim interdict.”
The financially embattled utility said the ruling enhances its efforts to collect payments from defaulting municipalities, which collectively owe it R31 billion.
Eskom has a massive R488 billion debt and cannot survive without bailouts from the government. More recently, it has suggested that it would have to increase electricity tariffs to achieve financial sustainability.