City Power wants to fight Eskom’s debt claim, just not in court

Johannesburg MMC for finance, Dada Morero, says City Power wants to resolve its impasse with Eskom through an independent mediator rather than the court system.

Morero also described Eskom as becoming “less dependable and more costly as a power source”. As a result, City Power wants to reduce its reliance on the state-owned power utility.

The dispute relates to Eskom claiming a R1.073-billion debt owed to it by City Power. At the same time, City Power has alleged that the power utility has overcharged it by R3.32 billion on bulk purchases.

“On the dispute between City Power and Eskom, the City is committed to the appointment of an independent mediator to resolve the current impasse between City Power and Eskom,” Morero said during his 2024 Budget Speech.

“The matter is currently before the courts.”

In an interview with Newzroom Afrika, the finance MMC said he believes the two entities will get to a better solution through mediation than a legal battle.

“It’s a dispute that we’d favour a mediation type of situation so that we can resolve the impasse,” he said.

“I think we will be able to get to a better solution without bringing in the courts. We’ll have to invoke intergovernmental relations.”

However, he also said City Power wants to reduce its reliance on Eskom through the city’s Integrated Energy Resource Plan.

“The survival of our business customers is at risk. Customers are switching and adopting new technologies and options,” said Morero.

“A result is that Eskom is becoming less dependable and more costly as a power source.”

Eskom claims that City Power owes it R1.073 billion in unpaid bills, while City Power claims that Eskom overcharged it on bulk power purchases. It says Eskom owes it R3.32 billion.

The state-owned power utility was the first to publicly address the issue in a statement released on Monday, 6 May 2024, when it announced that it had applied to the High Court in Johannesburg for a resolution.

The case is set to be heard on 4 June 2024.

Dada Morero, City of Johannesburg MMC for finance

Eskom said City Power started defaulting on its payments from October 2023 and that it had yet to receive payment for its March 2024 invoices.

“The debt owed by City Power has reached unprecedented levels, exacerbating Eskom’s already strained financial situation,” it said.

The power utility said it had no choice but to approach the courts.

City Power fired back the following day, claiming that Eskom owes it more than R3 billion for overcharges dating back to 2021.

“Eskom has admitted in some cases that there have been potential billing inaccuracies and has so far refunded City Power at least R483m over the recent years,” it said.

The municipal power distributor said it would oppose Eskom’s court application as a matter of process, adding that it has no basis in facts and law.

Eskom preemptively rebutted City Power’s allegations in its initial public statement, saying that even if it was overcharged, that didn’t negate City Power’s responsibility to pay bulk power bills.

“Eskom denies the claims made by City Power and will prove its position through the arbitration process,” Eskom said.

“In terms of the electricity supply agreements sanctioned by the Electricity Regulation Act of 2006, if a municipality raises a dispute with Eskom, it must still pay.”

The documents Eskom submitted to the High Court show that City Power owes nearly R1 billion for four invoices from late March 2024.

One invoice, dated 28 March 2024, amounts to almost R500 million split across three charges — R105 million, R184 million, and R197 million.

City Power also owes Eskom R336 million for an invoice from 29 March, R19.6 million for an invoice dated 30 March, and R57 million for an invoice from 31 March.

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City Power wants to fight Eskom’s debt claim, just not in court