The Department of Mineral Resources and Energy (DMRE) has urged stakeholders in the electricity industry to engage on an ongoing basis to avoid litigation, following a court ruling this week referring a dispute between the Minister and the City of Cape Town over the procurement of electricity from independent power producers (IPPs) back to the parties to seek a settlement.
The City of Cape Town has, since 2015, been in dispute with the national government and the National Energy Regulator of South Africa (Nersa) regarding its right to contract directly with IPPs, after it failed to receive a response from the Energy Minister to its request for a Ministerial determination under Section 34 of the Electricity Regulation Act (ERA) to enable it to do so.
The city approached the court in 2017 for a declarator after Nersa concluded that it could not license an IPP to establish new generation capacity without a Ministerial determination.
The matter was heard in the Gauteng Division of the High Court in Pretoria in May.
The Minister argued in court that the application was premature as the city had not complied with the requirements of Section 41 of the Constitution, dealing with cooperative governance between all spheres of government, or the provisions of the Intergovernmental Relations Framework Act 13 of 2005.
In her judgment, Judge Leonie Windell concurred with the Minister’s argument and referred the dispute back to the parties for resolution.
However, the judgment added: “In the event of any such disputes having been declared a formal intergovernmental dispute in terms of section 41 of the Intergovernmental Relations Frameworks Act, 2005, and all efforts to settle the dispute in terms of Chapter 4 of that Act were unsuccessful, any party may apply to this Court for leave to re-enroll this application for hearing on the same papers and on such conditions as the Court may determine.”
In a statement welcoming the judgment, the DMRE said the order had affirmed the principles of cooperative government.
“The Minister has always maintained that stakeholders in the industry must effectively engage one-another on an ongoing basis and avoid litigation,” the DMRE said in a statement that provided no detail on how the department planned to proceed in reaching a settlement with the City of Cape Town on the IPP dispute.
However, the department said it concurred with the views expressed by the court that the challenges facing South Africa could “best be addressed through a concerted effort by government in all spheres working together”.
In its response to the ruling, the City of Cape Town indicated that it was considering its options, noting that the court had not pronounced on the merits of the application.