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Local Municipalities Dis-Incentivised to Promote Energy Efficiency as Municipalities Rely on Electricity Sales

Aug 18, 2021

By Naadiya

Local government was neglected during the apartheid era and was only really elevated in the 1996 constitution after the apartheid era came to an end and the aim was to strengthen democracy and address past inequalities.

The thinking behind it was that the national government would be legitimized by making services like water, electricity, and sanitation affordable and accessible to the people, that however has not been the case, municipalities have been badly mismanaged and the current state of local municipalities has fallen short of that vision.

The big question; is the current model of how municipalities are being funded working?

Radio Islam chats to environmentalist Theo Covery from the University of Cape Town, in his PHD thesis he analyzed why municipalities are not keen to promote energy efficiency.

“Because municipalities are so reliant on the revenue from electricity sales which is a clear disincentive for them to promote energy efficiency; solar water heating, PV on the roof, switching to efficient light bulbs,” said Covery.

According to Covery, the system dates as far back as the Anglo-Boer war when South Africa was still a British colony.

“That was the model from England, where you sold services and those surpluses from those sales were used to cross-subsidize and paid to build roads etc…” said Covery.

The UK, New Zealand, United States, and many other countries abandoned that model when they came to the realization that it could only take their countries to a certain point, but also that it sent the wrong market signals. As cities grew bigger, more infrastructures became necessary the utilities took over.

“We [South Africa] kept that system and under apartheid, especially up until 1912,” explained Covery, where wealthy white politicians who owned properties could subsidize their property rates by selling electricity.

As municipalities continue to drown, and while corruption compounds the problem, whether or not municipalities should control utilities in the future remains a point of contention.

“The national government from 2000 to 2010 tried to take it away and they set up six regional electricity distribution centres but that failed,” said Covery.

He went on to explain how the six sites would control the country’s electricity supply.

Covery also highlighted that for the municipal system to be overhauled, its origin needs to be taken into account, and as long as the rife corruption continues and municipalities not only have access to capital but cash flow as well, the current model will remain.

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