The Legal Lowdown on Loadshedding

By 20th Jan 2020Feb 6th, 2020General Litigation

Introduction

As we are all aware by now, it appears that the man who works for Eskom that switches our power on and off has returned from leave, with loadshedding having been reimplemented as of the first week of January 2020.

The general party line is that this is being done in an effort to deal with the high energy demands and to protect the stability of the national electricity grid during times of severe pressure. When Eskom is unable to meet the nation’s electricity demands it implements loadshedding in order to reduce the demand to match its capacity so as to avoid a total collapse of the national electricity grid.

But is this all legal? Does Eskom have the right to simply deny us power as and when it deems fit? Is a person entitled to take legal action against Eskom if they or their business suffer financial or other damages as a result of same?

A Right to Electricity?

Whilst the Constitution of the Republic of South Africa of 1996 (“the Constitution”) does not provide for a right to electricity, section 152 and 153 of the Constitution place an obligation on municipalities to, inter alia, strive, within available resources, to ensure the provision of basic municipal services to communities in a sustainable manner. In the case of Joseph & others v City of Johannesburg & others 2010 (4) SA 55 (CC), the Constitutional Court held that the right to basic municipal services includes electricity.

Additionally, section 73(1)(a) of the Municipal Systems Act 32 of 2000 provides that municipalities must give effect to the provisions contained in the Constitution and section 73(2)(b)(i) further states that municipal services must be provided in a manner that is conducive to the “prudent, economic, efficient and effective use of available resources”. Section 5 the National Energy Act 34 of 2008 further confirms that measures must be adopted which provide appropriate forms of energy to South African citizens at affordable prices subject to, inter alia, the availability of energy resources.

From the above it is clear that South African citizens have a right to be supplied electricity by municipalities to the extent that, inter alia, there are sufficient resources. However, whilst the above-mentioned provisions place an obligation on municipalities, they do not place an obligation on Eskom. Notwithstanding the aforesaid, Eskom is bound by section 154(1) of the Constitution, in terms of which it must “support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions”. Therefore, Eskom may not hinder municipalities’ ability to perform their functions and on this basis, the implementation of loadshedding may be considered to be a violation of South African citizens’ right to electricity.

This is however caveated by the case of Afriforum NPC and Others v Eskom Holdings SOC Limited and Others [2017] 3 All SA 663 (GP) (24 May 2017) it was stated that “as the Constitution recognises the doctrine of necessity, where Eskom lacks the generation capacity to supply the entire country, it is entitled to put in place loadsheding arrangements on a temporary basis to avert the collapse of the grid.”  Importantly however, the Court further stated that, “when the issue is one of convenience or expenditure, the Constitution does not permit Eskom to deliberately disconnect defaulting municipalities…”

From the above, it appears that there is no absolute right to electricity but rather there is only the right to access electricity which can only be realised as and when there are sufficient resources available to provide for same. However, as is set out more fully hereunder, this does not mean that there is no recourse available to individuals or businesses that have suffered damage as a result of loadshedding.

Damages Claims Against Eskom

General

Apart from loadshedding being an annoyance and inconvenience to many South Africans, it can also result in individuals and businesses (“consumers”) suffering damage in various forms.

In instances where consumers have a contract directly with Eskom they may have a claim based on breach of contract where they suffer damage as a result of loadshedding. However, in most instances consumers do not have a contract directly with Eskom as Eskom sells electricity to municipalities who in turn deliver it to consumers at an increased price. In such instances, it is possible that consumers who have suffered damage as a result of loadshedding could have a claim founded in delict against Eskom.

Breach of Contract

In instances where a consumer has a contract directly with Eskom, it is possible that they can sue Eskom for breach of contract. Breach of contract occurs when a party to a contract performs contrary to the provisions of the contract.

Depending on the terms stipulated in the contract between the consumer and Eskom, it is possible that loadshedding could result in a breach of contract, however Eskom contracts have standard conditions in place which exempt it from liability for damages other than when the damages arose as a result of negligence on the part of Eskom. Specifically, clause 19 of Eskom’s standard conditions (Standard Conditions of Supply for Small Supplies with Conventional Metering is titled Continuity, Reduction or Variation of Supply), states the following:

“ESKOM shall take all reasonable precautions to procure and maintain suitable plant for the generation and distribution of electricity calculated to secure to its consumers a constant supply of electricity and shall procure efficient technical staff to control such plant, but ESKOM does not guarantee that the same will always be maintained, and ESKOM shall not be liable for damages, expenses or costs caused to the CUSTOMER from any interruption in the supply, variation of voltage, variation of frequency, any failure to supply a balanced three-phased current or failure to supply electricity unless the said interruption or failure is due to the negligence of ESKOM in failing to carry out its obligations aforesaid.”

Essentially clause 19, as set out above, provides that Eskom will not be liable for any damage caused as a result of an interruption to power supply, unless such interruption was caused as a result of its negligence in carrying out its obligations. Moreover, the wording of clause 19 implies that the onus will be on the consumer to prove negligence.

Based on the above, it may be difficult to prove breach of contract stemming from loadshedding itself as Eskom would in all likelihood argue that they were not negligent in implementing loadshedding to the extent that it is a rational response to preventing a national black-out.

However, clause 19 makes it clear that Eskom’s obligations include taking “all reasonable precautions to procure and maintain suitable plant for the generation and distribution of electricity”. Thus an alternative, more compelling argument for the consumer may be that the breach of contract stems from loadshedding to the extent that Eskom has been negligent in failing to “maintain suitable plant for the generation and distribution of electricity”. In line with this argument, Eskom’s negligence in failing to maintain the electricity infrastructure has necessitated loadshedding, as opposed to loadshedding being a rational response to avoiding a national black-out.

It is possible that section 25 of the Electricity Regulation Act 4 of 2006 (“the Electricity Regulation Act”) could be applicable in these circumstances. This section states as follows: “in any civil proceedings against a licensee arising out of damage or injury caused by induction or electrolysis or in any other manner by means of electricity generated, transmitted or distributed by a licensee, such damage or injury is deemed to have been caused by the negligence of the licensee, unless there is credible evidence to the contrary.’ (emphasis added)

Thus it could be argued that, in light of section 25 of the Electricity Regulation Act, clause 19 of Eskom’s Standard Conditions is unlawful to the extent that it places the onus on the consumer to prove negligence.

Based on the above, a consumer who has a direct contract with Eskom for the provision of electricity may be in a position to institute a claim against Eskom on the basis of breach of contract.

Delict:

In order for a consumer to have a claim founded in delict against Eskom, Eskom must have caused damage to the consumer through its conduct. In order for a claim based on delict to succeed, all the elements of a delict would need to be proved. Briefly, these elements are conduct (an act or omission); wrongfulness (has a legally recognised interest been infringed?); fault, causation and damage.

From the above, if a consumer can satisfy the elements of a delict mentioned above, they may have a claim against Eskom for damages founded in delict.. Should they succeed in their claim, they would be in a position to claim compensation for the damage or loss that they have suffered as a result of loadshedding. Ultimately however the courts will have to decide each case on its own merits.

Conclusion:

Despite consumers potentially having a claim against Eskom, either based in delict or breach of contract, individual consumers may face issues instituting legal action against Eskom given that in cases where the damage is relatively small the legal costs may surpass the amount claimed. As such it would be advisable for individual consumers to first inspect their insurance policies to establish whether any of the damage they have suffered as a result of loadshedding is covered by their insurer.

Should consumers not have insurance policies or should such policies not cover damage caused as a result of loadshedding they could bring a class action lawsuit against Eskom. Essentially a class action suit is a lawsuit in terms of which a group of people with the same or similar injuries caused by the same action sue the wrongdoer as a group. A class action law suit is currently being instituted against Eskom for the damage sustained to consumers as a result of loadshedding which will in all likelihood set the precedent for future cases of its kind.

However, should a consumer or group of consumers decide to take Eskom to Court they must bear in mind that the courts may be reluctant to hold Eskom liable for damage suffered by consumers as it could potentially open the floodgates to a proliferation of claims against Eskom. Moreover, should the floodgates be opened, Eskom may be held liable for billions in compensation, which money would ultimately derive from either increasing the costs of electricity and/or receiving a government bail-out which would essentially be derived from tax revenue.