Durban - Progress in establishing the six regional electricity distributors (REDs), a process that has been on the cards for years, has been tortuous - and more delays are in prospect.
The process is expected to gain momentum only when the RED Establishment Bill becomes law. Mbulelo Musi, a spokesperson for Electricity Distribution Industry (EDI) Holdings, said on Friday that the bill sought to ensure that electricity distribution would be established as six wall-to-wall REDs that would be governed by the National Energy Regulator of SA.
The bill has been referred back to the department of minerals and energy by the cabinet for further work.
Musi said the issues the cabinet wanted addressed included to what extent there would be a mechanism to make the establishment of the REDS enforceable, including possible constitutional issues.
The constitution stipulates that the reticulation or distribution of electricity is a local government responsibility.
This stipulation gives ammunition to municipalities that are opposed to the REDs.
EDI Holdings was established in 2003 with the responsibility of creating the REDs. In October 2006 the cabinet approved the establishment of six wall-to-wall REDs. To date, 120 out of 180 municipalities have signed accession accords with EDI, committing to the process.
Sipho Nkese, the executive for human capital at EDI Holdings, said the process of establishing the REDS was becoming frustrating. "We need the bill in order to fast-track the REDs establishment. Some municipalities are ready, but we need the above framework."
REDs will take over all electricity distribution infrastructure owned and operated by municipalities and Eskom.
The REDs would be established as public service entities and the municipalities would be the service authority, said Musi.
Some municipalities have opposed the REDs as revenue from electricity is a large part of their income. EDI Holdings has recommended that municipalities be allowed to tax electricity consumers through a surcharge.
This is now possible through the Municipal Fiscal Powers and Functions Act , but it will still be subject to approval by the minister of finance.
The rationale behind the establishment of the REDS is to harmonise electricity tariffs - of which there are about 2 000, meaning that some consumers pay 25c a kilowatt-hour and others 71c a kWh.
The REDs will ensure investment in electricity infrastructure, which in some areas has been neglected as municipalities used revenue from electricity sales for other purposes.
But it is not just the enabling legislation that is required to get the ball rolling.
Besides signing an accession accord with EDI, municipalities need to ring-fence distribution assets. EDI has allocated R1.2 billion for the various processes municipalities need to complete, including the ring-fencing of assets.
Nkese said EDI had to harmonise the service conditions of the 31 000 people working in the distribution industry. He said requests to Eskom and the SA Local Government Association for this information had been unsuccessful. But the information was essential to the setting up of the REDs.