CLA News / The impact of load-shedding on fundamental constitutional human rights : United Democratic Movement and Others v Eskom Holdings SOC Ltd and Others (GP)

Eskom to produce sufficient supply of electricity as ordered by the court

United Democratic Movement and Others v Eskom Holdings SOC Ltd and Others (GP) (unreported case no 005779/2023; 003615/2023; 022464/2023, 1-12-2023) (Davis J)

The Gauteng Division of the High Court in Pretoria has ordered the Minister of Electricity to take all reasonable steps by no later than 31 January 2024, whether in conjunction with Eskom and other organs of state or not, to ensure that there shall be sufficient supply or generation of electricity to prevent any interruption of supply because of loadshedding to following institution and/or facilities –

• all ‘public health establishment[s]’ as defined in the National Health Act 61 of 2003, including all hospitals, clinics and other establishments or facilities;
• all ‘public schools’ as defined in the South African Schools Act 84 of 1996; and
• the ‘South African Police Service and Police Stations’ as envisaged in the South African Police Service Act 68 of 1995, including satellite stations.

With regard to tariffs, the court stated that:

• The respective review applications of the tariff determination by the National Energy Regulator of South Africa (NERSA) of 12 January 2023 are dismissed.

This comes after the applicants applied to the High Court for a declaration regarding the non-realisation of the government’s intention in the late 1990s to open the energy sector to competition with private actors and to timeously implement the Independent Power Producer Procurement Programme, including –

• the delays in the decisions and implementation to build the Medupi and Kusile power stations;
• the decisions to run power stations beyond their capabilities without proper maintenance;
• the failure to ensure or approve sufficient revenue for its services and the failure to take adequate steps to protect Eskom from criminal activity, corruption and ‘state capture’, individually and collectively; and
• the resultant energy crisis manifested by loadshedding and the continued failure to remedy the crisis, constituted and still constitutes breaches by the respondent organs of state to protect and promote the rights contained in the Bill of Rights.

The court further held that it specifically declared that the breaches constitute unjustified infringements of the following rights enshrined in the Constitution –

• the right to human dignity contained in s 10;
• the right to life contained in s 11;
• the right to freedom and security of the person contained in s 12;
• the right to an environment that is not harmful to health and wellbeing contained in s 24(a);
• the right of access to healthcare services contained in s 27(1)(a);
• the right to access of sufficient food and water contained in s 27(1)(b); and
• the right to basic education contained in s 29(1)(a).

In the judgment’s introduction the court held that in terms of s 7(2) of the Constitution, which, among others, provides that the state must respect the rights contained in the Bill of Rights, Eskom (an organ of state) had (and still has) a duty not to conduct itself in a manner that would result in an infringement of those rights. The same duty rests on other organs of state and that duty ‘… to respect the rights in the Bill of Rights is uncontroversial’.

The court pointed out that the three consolidated applications have become known as the ‘UDM application’, the ‘DA application’ and the ‘SALGA application’ being references to the first or only application in matters 005779/2023, 003615/2023 and 022464/2023 respectively. In the Democratic Alliance (DA) application, the respondents are NERSA and 20 other organs of state or their representatives involved in the generation, provision and distribution of electricity in one way or another.

The court pointed out that the United Democratic Movement (UDM) was the first applicant, and it was joined by 18 other political or public interest applicants, as well as some medical healthcare practitioners personally. In both the UDM and the DA applications the first subject matter was loadshedding and the declaration of its unconstitutionality and what consequential relief if any could be granted. In addition, the South African Local Government Association’s (SALGA’s) application, a further subject matter was the review of a tariff determination by NERSA.

The court said that the relief sought in the UDM application were in two parts of which Part A was labelled as an application for ‘humanitarian relief’ and was heard in March 2023. The court added that in the judgment in respect of Part A of the UDM application, the court found as follows:

‘In simple terms, the government had been warned (and had accepted) that it will run out of a generating capacity by 2008 (which had happened) and in the 15 years since then, has failed to remedy the situation. Added to this, is the detailed evidence of Eskom’s Acting Group Executive: Generation regarding catastrophic failure suffered by both Kusile and Medupi, which contributed substantially to the overall lack of generator capacity.

In addition to the above, Eskom has admitted that, in order to attempt to supply electricity at a continuous level, it ran coal powered plants harder than was advisable and deferred maintenance programmes during which the plants would be taken offline. It is only recently that maintenance programmes have been re-implemented. The result is, however, frequent breakdowns in non-maintained equipment and unavailability of units during repairs and maintenance.’

The court held that Eskom has explained in its answering affidavit in the UDM application that in addition to the historic failure to maintain its power generating fleet and the governmental failure to create new generation capacity, inability to render sufficient electricity to the country was further hampered by the lack of cost-effective tariffs, the lower ability of aging generation fleet, the previous management’s refusal to conclude renewable energy Independent Power Producer contracts, regulatory obstacles, high municipal debt and alleged state capture, corruption and sabotage damage. It is worth mentioning these complaints as they also feature in the NERSA tariff review.

The court pointed out that Eskom conceded that ‘loadshedding causes human suffering and has detrimental impact on a variety of constitutionally protected rights, including those that the applicants identified’. The rights that the UDM applicants have identified, in particular, were the rights to proper healthcare, the supply of water and sewage treatment and provision of education and police services.

The court in respect of the UDM’s Part A application granted the following order on 5 May 2023:

‘1. Pending the final determination of Part B of the application in case no 005779/2023, in respect of users of electricity, where the supply directly by Eskom Holdings SOC Ltd (“Eskom”) or by local authorities, the Minister of Public Enterprises shall take all reasonable steps within 60 days from date of this order, whether in conjunction with other organs of state or not, to ensure that there shall be sufficient supply or generation of electricity to prevent any interruption of supply as a result of loadshedding to the following institutions and/or facilities –

• all “public health establishment” as defined in the National Health Act 61 of 2003, including publicly owned hospitals, clinics and other establishments or facilities;
• all “public schools” as defined in the South African Schools Act 84 of 1996;
• the “South African Police Service” and “police stations” as envisaged in the South African Police Service Act 68 of 1995.’

The court pointed out that shortly after the order had been granted, the Minister of Public Enterprises, the President and the cited Government of the Republic of South Africa delivered notices of applications for leave to appeal. In his notice the Minister of Public Enterprises took no issue with the declarations of breaches of constitutional obligations. The application for leave to appeal was based on the grounds that the order was alleged to be vague, that it was impossible to implement as the Minister did not have the power to generate and supply electricity, and that the order was not competent in law for the same reason that the order violated the doctrine of separation of powers.

The court added that significantly the President and ‘the government’ also did not take up issue with declarations of breaches of constitutional duties and obligations and the findings regarding the failure of the organs of state to protect the rights enshrined in the Bill of Rights and materially relied on the same points as those raised by the Minister of Public Enterprises as grounds on which leave to appeal should be granted. The court stated that shortly before the commencement of the hearing of the consolidated applications on 15 September 2023, including the hearing of Part B of the UDM application, the UDM applicants (excluding Action SA) informed the High Court that the applicants withdraw the application in terms of Part B and left the issue of costs in the discretion of the court.

Action SA indicated that it in fact only sought the ‘humanitarian relief’ claimed in Part A. Both the UDM and Action SA conceded that, should Part B of the application not proceed, that the interim order granted in terms of Part A would lapse. This would also render the applications by the Minister of Public Enterprises and the President for leave to appeal that order moot.

In the DA application, the court pointed out that the relevant portion of the DA’s Notice of Motion dealing with the topic of loadshedding is contained in Part B. The relief sought therein was as follows:

‘3. With respect to the respondents’ on-going and repeated decisions to implement loadshedding:

3.1 declaring the decisions to implement loadshedding inconsistent with the Constitution and invalid;

3.2 reviewing and setting aside the decisions to implement loadshedding;

4. Declaring the respondents’ response to the on-going energy crisis in South Africa inconsistent with the Constitution and invalid;
5. Declaring that the respondents’ response to the on-going energy crises has fail to respect, protect, promote and fulfil the rights in the Bill of Rights and has unjustifiably limited various constitutional rights, including:

5.1 the right to human dignity in section 10(5);

5.2 the right to life in section 11;

5.3 the right to freedom and security of person in section 12;

5.4 the right to an environment that is not harmful to health and wellbeing in section 24(a);

5.5 the right of access to healthcare services in section 27(1)(a);

5.6 the right to access of sufficient food and water in section 27(1)(b);

5.7 the right to basic education in section 29(1)(a);

5.8 the right to access of courts in section 34 of the Constitution.

6. Directing the third to fifth respondents to file with this court within 30 days of the date of this order a report setting out the executives’ plan to avert the energy crisis, including short-, medium, and long term steps;
7. After the filing of the report in paragraph 5, interested parties may approach this court on supplemented papers for just and equitable relief’.

The DA also claimed costs.

The court added that in subsequently delivered heads of arguments alternative relief by way of the appointment of a Special Master as a remedial interdict was sought. In terms of this proposal a Special Master would be appointed by the court after nominations and a consideration by the court of candidates. The court pointed out that in support of its application for a declaration on breaches of constitutional obligations, counsel for the DA referred the High Court to a number of facts which remained in existence, not only since the inception of loadshedding but also since the launch of its application and despite the order in terms of Part A of the UDM application. The court added that with reference to Hoffmann v South African Airways 2001 (1) SA 1 (CC) the DA argued that once there could be no doubt that rights enshrined in the Bill of Rights have been infringed and are continuing to be infringed ‘it now remains to consider the remedy to which the [applicant] is entitled’.

The court said that NERSA opposed the granting of a declaratory relief based on breaches of constitutional duty against it. That the argument was that the DA had not sufficiently identified the duty which rested on NERSA to prevent energy crises but, insofar as NERSA has contributed to the fact that non-cost effective tariffs had been approved in the past which have impacted negatively on Eskom’s sustainability, the argument was that this all related to historical conduct and there is no purpose going forward to make a declaratory order in this regard. NERSA further argued that, as it may exercise some control over the proverbial purse strings, it does not control the spending of what is recovered from the proverbial purse strings, it does not control the spending of what is recovered from that purse and neither does it control the generation of electricity.

The court added that at the outset, counsel for Eskom accepted that the High Court had already in its judgment in respect of Part A of the UDM application found that the organs of states involved in that application had breached their constitutional duties. The court pointed out that counsel argued that Eskom is ‘agnostic’ in respect of that finding and equally ‘agnostic’ regarding any other declaration of constitutionally invalid conduct but denies that any of Eskom’s conduct amounted to such breaches.

Eskom submitted that the DA’s case against it suffers from a ‘Plascon Evans problem’ which in short provides that, in instances where real disputes of fact exist in motion proceedings, an applicant cannot succeed if, on the version of the respondent read with the uncontested version of the applicant the requirements for an order have not been satisfied. The facts averred by Eskom are that the core cause of the energy crisis was failure by the state to authorise energy generation. This power lies in the hands of the Minister of Mineral Resources and Energy (now the Minister of Electricity) and Eskom can only generate what those Ministers allow it to generate.

The court said that the government respondents argued that it was not necessary to make a declaratory order as the court is precluded from granting the relief which the DA claims and therefore that a declarator would have no consequence.

The court held that the above argument was persisted with despite the acknowledgement that the court could take all admissible evidence already placed before it into account and, despite the UDM not proceeding with its application, a court was entitled to take into account the contents of the affidavits already placed before the court indicating unconstitutional conduct on the part of the state respondents. The court added that the argument was further developed in the heads of argument delivered on behalf of the state respondents that the declarators sought by the DA were sought in the abstract. The state respondents argued that any order by a court should be rooted in specific facts based on an identified cause of action and that a general declarator that the President and government (or NERSA or Eskom) failed to ensure an uninterrupted supply of electricity or failed to prevent the energy crisis is too generalised.

Tariffs

With regard to the tariff review the High Court pointed out that on 12 January 2023 NERSA approved a tariff increase for Eskom in respect of bulk electricity tariffs for the 2023/2024 and 2024/2025 financial years. The court said that both the DA and SALGA sought to have the decision whereby NERSA approved the tariff increases reviewed and set aside. SALGA’s main ground of review in this context was that NERSA failed to conduct a prudency and/or efficiency assessment that considers corruption, fraud, and wasteful expenditure at Eskom prior to making the decision.

NERSA and Eskom do not dispute that corruption, fraud and wasteful expenditure are relevant considerations for purposes of prudency and efficiency.

However, the DA’s first issue of dispute was whether NERSA should have considered cross-subsidisation during the multi-year price determination and whether NERSA, on the facts, considered the impact of cross-subsidisation when it took the impugned Eskom Retail Tariff and Structural Adjustment Application decision. NERSA contended that from the provisions of the Electricity Pricing Policy it is clear that cost subsidisation has always been considered a significant objective to ensure that access to electricity for indigent households and that a sliding scale was envisaged whereby cross-subsidies would gradually reduce as the consumption level increased. NERSA said that tariffs must be set to recover costs as follows –

• the energy costs for particular customer category;
• the network usage costs for particular consumer category; and
• service costs associated therewith.

The court pointed out that in respect of overstaffing at Eskom, NERSA was entitled to exercise reasonable judgment on what costs to allow in respect of employee costs. The court added that NERSA did exactly that and considered the costs of staffing and as set out in its reasons, it produced the amount of revenue applied for by Eskom in a detailed manner. The court said in respect of the issue that consumers who purchase electricity directly from Eskom pay a lower tariff than those consumers who purchases electricity from local authorities, the appropriate stage to conduct a detailed assessment of this is conducted when NERSA determines municipal tariffs. The court pointed out that NERSA issues a guideline for municipalities after the consultation with stakeholders and has taken the differences into account when determining the tariffs.

The court said that with all the relevant factors properly considered in detail, the conclusion reached were neither arbitrary nor irrational and the issue of cross-subsidisation was considered at the appropriate stage. The court therefore said that both review applications of the DA and SALGA must fail.

Author: Joanne Anthony-Gooden 

Firm: Anthony-Gooden incorporated

Email: joanne@anthonyinc.co.za

Jurisdiction: South Africa