South African Businesses Cry Foul Over The Non Bearable Basic Eskom Tariff During Covid-19 Pandemic – “Reduced Consumption Versus 100% Basic Fee Is Extortionary.”

Brian Kazungu, 17/02/2021

Businesses in South Africa are crying foul over what they termed as non-bearable basic Eskom tariffs which they consider to be extortionary when taking into account the reduced actual consumption which resulted from the Covid-19 induced lockdowns.

Some business owners who said they had engaged Eskom over the matter expressed concern on the fact that the power supplier has continued to bill them as normal and yet the lockdown has prevented them from utilising their properties since people are being made to work from home.

One of the landlords who signed an Integrated Electricity Supply Contract with Eskom said that because of the lockdown and its impact on their operations, their actual consumption has reduced by 70% but the power company is not cooperative in having the tariff adjusted.

They also revealed that attempts to discuss the issues with Eskom proved to be non-effective as the company indicated that the process to apply for the alteration of a supply contract to reflect the reduced consumption to current level takes about 12 months to process and approve.

“Just imagine spending 12 months paying 70% more on something when you really know you must be paying only 30% of that amount.

For example, on an integrated supply contract of 315 KVA, you have to pay about R12 000 ceteris paribus but our current consumption is only 90 KVA. Why should we then pay for the absurd 200 KVA that we are not using?” The businessman fumed.

Business owners who were organizing themselves into a group of aggrieved parties that share a common problem said they were planning to take Eskom to the courts in order to invoke the Force Majeure principle which they said was provided for in the contracts.

A lawyer who commented on the issue said “rather than leave their fate to the common law doctrine of Supervening Impossibility, in modern times, parties, in a bid to manage risk, have sought to regulate Supervening Impossibility by specifically making provision for it in written contracts.

These clauses can either broaden or narrow down the scope of the doctrine depending on what the parties agree. Such contractual clauses have popularly come to be known as “Force Majeure” clauses.

Thus in the event of supervening impossibility, the Court will look to the “Force Majeure Clause” to determine the dispute. In the absence of such a clause the court will apply the common law.

Secondly, it is important to understand that the actual legal principle is that of “Supervening Impossibility”. Normally, a party who fails to deliver his part of the bargain is guilty of “breach of contract” and the offended party can sue for specific performance or cancellation and damages.

However, if performance has been rendered impossible by an occurrence beyond their control such as “force majeure” in the form of, e.g. an earthquake, volcano, tsunami or a plague, they are absolved from liability.

Therefore in this case, force majeure (e.g. a Tsunami), is the supervening event that has made performance impossible.” He explained.