The City of Cape Town has proposed that national government now chooses a different pilot site for the restructuring of electricity distributionunder the RED system after the lapse of its operating agreement withRED1, the first pilot company set up by the City to implement the systemproposed by the Department of Minerals and Energies three years ago.

This follows on the confirmation by the National Energy Regulator(Nersa) that the Electricity Supply and Distribution licence will be transferred back to the City next year. The City withdrew its support for RED1 when cabinet indicated that REDs will be transformed into public entities.

According to Cllr Ian Neilson, Mayoral Committee member for Finance, the legal opinion obtained from senior counsel has confirmed the City's viewthat a public entity for the provision of a municipal service is unconstitutional.

"We therefore propose that a different pilot site is chosen. This waythe benefits of the restructuring process can be clearly measured on acountry-wide basis.

"The City is obliged to use the resources of the municipality in the best interests of its residents and electricity consumers of the area and continuing to meet the costs of RED1 while new processes are developed is not acceptable," says Cllr Neilson.

"We will play an active role in the development of the enablinglegislation and contribute to the restructuring process, but we are notinterested in again being the pilot site. Once the full legislative framework is passed by Cabinet and the benefits from the pilot site are evident, the City will ensure that the electricity service in Cape Town is provided in a financially and environmentally sustainable manner.

"The City of Cape Town has been a dedicated supporter of the electricity restructuring process under the blueprint stipulated by national government some three years ago. For well over two years, City officials
have worked tirelessly at ensuring that the tight deadlines for the
process have been met, even within the constraints of restrictive localgovernment legislation.

"Unlike other regions, the City area has minimal disruptions in powersupply. The recent problems arose from the generator of electricity (Eskom) and not from the City's reticulation of electricity," he says.

Issued by:

Communication and Marketing: City of Cape Town

Tel: 021 400 2201
Fax: 021 957 0023

Media Queries:

Louise Muller
Director: Shareholding Management
Tel: 021 400 3940
Cel: 084 376 7169

David Beretti
Chair: Ad Hoc Committee: Electricity Restructuring
Tel: 021 400 5050
Cel: 084 611 2424