New electrical system could bring changes
2005-07-07
THE electricity distribution industry is to be restructured into six Regional Electricity Distributors (REDs) in an effort to rationalise tariffs and roll out the electrification programme.
A government-owned company (EDI Holdings) has been set up to oversee and project-manage the process.
REDs will consist of joint-venture companies, formed by Eskom and local authorities. They will purchase electricity from generators like
Eskom at wholesale tariffs.
Drakenstein is considering joining Red1 (which will kick off with Cape Town and Eskom Western Cape), probably by 1 July 2006.
At present, electricity consumers in the Drakenstein municipal area purchase electricity at different tariffs and conditions of supply and service depending on whether they happen to be in the municipal or Eskom area of supply.
It is envisaged that creation of the RED will, in the medium to long term, provide a more equitable, efficient and sustainable service to communities and industry.
Tariffs to be charged by the RED would be subject to the same evaluation and prior approval requirements as present tariffs and consumers will have the same recourse to the National Electricity Regulator.
Drakenstein will remain constitutionally responsible for electricity service provision.
Issues that have not been finalised include the possible issuing of shares to municipalities, including payment of dividends by the RED, to make up for possible revenue loss.
Another issue is financial arrangements, such as the transfer by municipalities of a part of the equitable share to the RED for free basic electricity provision.
The strategy for collection of payment by the municipality if electricity is in the hands of the RED, ensuring a financially sound and sustainable operation, must also be sorted out.
The change would not only impact on consumers, but also on municipal employees, some of whom may be transferred to RED1.
Cape Town is to form the anchor council for the body, after it came top in an assessment of municipalities participating in REDs.
Cape Town executive city councillor Saleem Mowzer has resigned from the council to become the CEO of RED1.
RED1 will emncompass the Western Cape, Northern Cape and six municipalities in the Eastern Cape, one of six REDs in the country.
Comments and inputs must reach the Municipal Manager by 14
October.
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