Please note that this is not the final ESDP.

1 INTRODUCTION

1.1 Background to the Electricity Service Delivery Plan

The electricity industry is in the process of being entirely transformed in South Africa. This process commenced with the initiation of majority representative government in 1994. Eskom generates 98% of all electricity used in South Africa and do the transmission of 100%. Eskom also distributes 60% of electrical energy to 40% of customers in South Africa. Clearly Eskom performs a large function in this sector. The remaining function is performed by 415 Municipalities who distribute 40% of the electrical energy to 60% of consumers in South Africa. This situation resulted in fragmentation, viability problems (defaulting on Eskom bulk payments), multiplicity of tariffs, revenue collection problems, etc. in the Electricity Distribution Industry. Restructuring seemed necessary to gain efficiency.

The process of change in the electrification sector was further stimulated by the Electricity Restructuring Inter-Departmental Committee (ERIC). This Committee was formed with representation from the Departments of Minerals and Energy; Housing; Public Enterprises; Provincial Affairs and Constitutional Development; Finance and Trade and Industry for the purpose of formulating government’s position on a report of the Electricity Working Group (EWG). The EWG report made recommendations on rationalising the Electricity Distribution Industry (EDI) and changing how the EDI would fund its obligations.

The White Paper on Energy Policy of South Africa indicates that the National Electricity Regulator of South Africa (NERSA) has the responsibility of overseeing electricity supply in South Africa and amongst its tasks is to regulate energy tariffs. The National Electrification Fund (NEF) has been established and is funded from a budget determined annually as part of the budgetary process. A National Electrification Co-ordinating Committee was established in 1999 to consider all issues relevant to legislation, funding, planning, monitoring and evaluation of a sustained integrated National Electrification Plan (NEP) aimed at achieving universal access to basic energy services that are affordable. The responsibility for the electrification programme is currently resides with the Department of Minerals and Energy, who established the Integrated National Electrification (INEP) unit to plan and administer the electrification process. This brief resume of the background indicates the extensive process of change in the electrification sector.

Accompanying the changes in the electricity sector have also been significant changes in the allocation of roles and responsibilities between different spheres of government, notably the national and local government spheres. These changes, governed in the initial period only by the South African Constitution (1996) and subsequently by the Municipal Structures Act, Act 117 of 1998 and the Municipal Systems Act, Act 32 of 2000, set the framework for the preparation of Integrated Development Plans (IDP) for both District and Local Municipalities. The Municipal Structures Act, Act 117 of 1998 indicates that the provision of bulk electricity supply is a District Municipal function and reticulation is a Local Municipality function. Electricity supply is therefore seen as one of the sectoral plans to be dove-tailed with the Integrated Development Plan (IDP) along with other sectors such as Water, Transport and Housing at both District and Local Municipality levels.

This report sets out the Electricity Service Delivery Plan for Amajuba District Municipality in the context of the national policy parameters for electricity supply and the Local Government context as currently understood. It must be noted that there are still further changes possible to the definition of roles and responsibilities and how they are allocated between District Municipalities, Local Municipalities, Government Departments and Service providers. On 29 November 2005 at a meeting of the Economic Cluster Ministers (DPE, DME, DPLG, National Treasury) it was decided that the status quo regarding the electrification institutional structures would remain in place until the REDS are in operation. Once the REDS are in place the electrification programme will be transferred to the MIG programme. The boundaries and composition of the REDS to be implemented were also changed at the same meeting.