Electricity Restructuring and Local Government Towards a Better Deal
PricewaterhouseCoopers (PwC)1 estimated that in 2000 the total value of municipal electricity surpluses was of the order of R2.4 billion – and proposed that municipalities be compensated for the loss of these historic surpluses through a combination of a municipal electricity levy and RED dividends (accruing to those municipalities who make a net asset contribution to the new REDs). [...] Role of local government as the electricity service authority The RED blueprint provides little clarity on the future role of local government as an electricity service authority. [...] Municipal debt and the option of shared service centres Considerable uncertainty exists around municipal debt and the utility of the municipal threat to ‘cut-off’ electricity as a mechanism to recover consumer debts on other services. [...] Conclusion Whilst the financial impacts of EDI reform may be significant they can be ameliorated through a number of mechanisms – particularly through the adoption of a phasing-in approach and the use of a national ‘cap’ on locally-controlled municipal electricity levies. [...] Of greater concern though is the lack of clarity around the future role of local government in governing the EDI.