Municipalities urged to keep up with energy generation

Monday, October 8, 2018

While the future of the generation, transmission and distribution of energy is changing rapidly, it is vital that municipalities keep track and stay ahead.

“Government wants to provide all citizens with access to basic services. This will mean that all forms of energy generation should be employed,” said Cooperative Governance and Traditional Affairs Minister Zweli Mkhize.

This includes traditional coal-fired generation plants through to hydro plants, solar farms, wind turbines and small embedded generation, the Minister said on Monday.

Already 188 municipalities are licensed through the National Electricity Regulator of South Africa (NERSA) to distribute electricity to consumers.  

Mkhize told the technical convention of the Association of Municipal Electricity Utilities (AMEU) underway in Pretoria that the space occupied by local municipalities was becoming more complex as other forms of electricity generation were becoming effective.

The AMEU is an association of municipal electricity distributors as well as national, parastatal, commercial, academic and other organisations that have a direct interest in the electricity supply industry in Southern Africa.  

“Renewable energy is changing the face of the energy game and municipalities are responding, simply to provide affordable services to citizens.

“Renewable energy is also providing other opportunities in the energy sector in municipalities,” the Minister said, while referring to the solar farms being erected within the borders of a municipality that could be fed into the municipal network as part of the generation and transmission combination.

This challenge, he added, will have to be managed well so that the total effect on the national grid is not compromised.

Furthermore, businesses and households are installing solar arrays on their rooftops.

Mkhize said this will no doubt have a negative impact on municipal revenue generation on which electricity is one of the major sources of the revenue generator.

In recent years revenue source has seen a decline in municipal profit margins due to the higher cost of bulk electricity.

Municipal debt

Municipal debt has been increasing. This increase has been attributed to the inadequate collection of revenue as a result of the runway non-payment for municipal services.

National government departments were as at March 2018 owing municipalities R3.2 billion. Aggregate municipal consumer debts were R143.6 billion as at 30 September 2017. The largest component relates to households which accounts for 70.8% or R101.6 billion followed by commercial or business for 16.8% or R24.1 billion and another category of debtors for 6.7% or R9.6 billion.

Municipalities are also experiencing cash flow problems which have resulted in them defaulting on their bulk electricity account with Eskom.  

As at the 31st of May 2018, the total overdue debt was over R14 billion.

Challenges faces municipalities

Some of the challenges facing municipalities in this regard, include the widespread “culture’’ of non-payment by consumers, the ageing infrastructure which results in high electricity and water losses and as create opportunities for illegal connection.

To look into and resolve this constitutional and legislative conundrum, Mkhize said they have established an Inter-Ministerial Task Team on Electricity Reticulation, Distribution and Monies owed to Water Trading Entities and Water Boards.

The IMTT’s mandate is to look into the Constitutional issue of the authority or reticulation of electricity, as well as other structural and systemic challenges in electricity reticulation.


Among the interventions adopted by the department include the Local Economic Development as the sixth pillar of the Back to Basics programme.

Working with the Department of Trade and Industry, there is an improved alignment between national economic investments such as Special Economic Zones, Industrial Development Zones or Industrial Parks and the poverty-stricken municipalities in order to stimulate growth and employment and improve revenue generation.  

Mkhize said it is therefore vital that municipalities also identify and embark upon programmes in the Renewable Energy sector to stimulate LED, as there are huge opportunities for the future especially in the township and rural economies. –