KwaDukuza municipality shuts down request from two estates to take over electricity grid maintenance

KwaDukuza municipality has flatly rejected a request by two Dolphin Coast estates to take over the maintenance and repair of their electricity network.

At a virtual meeting last Tuesday, council unanimously rejected the proposal submitted by Simbithi Eco Estate Homeowners’ Association (SEEHOA) and Brettenwood Homeowners’ Association (BHOA).

ANC chief whip, Dumisane Nzimande recommended that the municipality stay with the “status quo” and not give up its responsibility of maintaining the electrical infrastructure.

Noting that because of budget constraints the municipality was challenged to maintain and repair its existing electrical network.

They asked that KDM transfer ownership of the electrical grid at zero value to them, which would at their cost, take on the responsibility of repairing and maintaining the grid in accordance with KDM standards.

It was also proposed that KDM transfer the individual homeowners service-level agreements to the estates which would then take responsibility for service delivery and administration.

In return the estates would collect rates and electricity accounts from homeowners on behalf of KDM, install smart meters to ensure accurate billing, secure and maintain the substations and provide quarterly reports of work done.

Municipal manager Nhlanhla Mdakane said in a report to council that the sale of electricity, bought wholesale from Eskom and sold on to consumers with a markup, was the municipality’s main source of revenue, accounting for 72% of income.

He queried how this move would affect their revenue and raised concerns that should the municipality agree, this could set a precedent that may lead to other homeowner associations going the same route.

“What would prevent these estate homeowner associations from generating their own electricity and buying less and less from KDM? This appears to be the move in which alternative energy is generated. This might collapse the municipality going forward,” he said.

In 2012, KDM was granted a loan of R276 million with 56% of it going towards strengthening the capacity of its electricity grid.

KDM was also in the process of securing another loan of R160 million towards the building of Dukuza substation.

He said all this money could be perceived as wasteful expenditure in the long run.

Money spent on maintenance

The National Energy Regulator of South Africa (NERSA) recommends that about 7% of revenue should be spent on maintaining the electricity network. But there has been a historical under-investment in KDM’s distribution infrastructure.

According to KDM chief finance officer Shamir Rajcoomar the municipality’s infrastructure spend is about 3%.

He told council it would take a number of years for KDM to reach the recommended 6-7% spend.

Theft of electricity, illegal connections, cable theft, vandalism and consumer debt were challenges facing the municipality.

Mdakane said that without the leverage of electricity, the collection of rates and refuse would become harder to collect from households that could not be disconnected.

KDM would also lose its ability to apply the clearance certificate as leverage to collect outstanding electricity debt.

He said should council consider the request they needed a feasibility study to determine who was better placed to provide the municipal service – an external provider or internal staff.

The labour unions would also need to be informed of the study.

Brettenwood Homeowners Association (BHOA) chairman, Mike Doveton said while they respected the decision of council not to sell back the (BHOA) electrical infrastructure they would continue with their engagement.

“It is still our intention to take over the maintenance of the BHOA electrical infrastructure in order to assist KDM in ensuring the infrastructure is maintained to standard thereby reducing outages.

“We will continue to engage with the municipal manager and his team to find a solution that best fits both parties.”

Simbithi Eco-Estate general manager, Malcolm Samuel said: “The KwaDukuza Municipality and Simbithi Eco-Estate are engaging on the condition and future of the electrical infrastructure which supplies, inter alia, the Estate.

“The Estate has not received any official response to its proposal to KDM that the Estate assume accountability for the infrastructure, which, it is strongly suggested, would be in the best interests of all stakeholders.

“Until we receive an official response from KDM we would prefer not to engage on this matter publicly”.