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09 Jul 2024
BY Wandile Ndabambi AND Michelle Casey

Navigating the Municipal utility maze: How dispute resolution mechanisms impact municipal service disconnections

With the increased use of solar energy and borehole water supply, consumer dissatisfaction has increased regarding water and electricity charges levied by municipalities based on alleged consumption or estimated consumption. This happens, for example, when, despite using solar energy and/or borehole water supply, the charges levied by the municipalities occasionally appear to remain the same (or even higher) than before such supply.

Dissatisfied consumers can lodge a dispute with their municipality to dispute inaccurate charges levied for water and electricity consumption.

To formally lodge a dispute with a municipality, the consumer is required first to satisfy the dispute resolution process provided for in the by-laws and the municipality’s credit policy requirements and, if still dissatisfied with the outcome, act in accordance with sections 95(f) read together with 102(2) of the Local Government: Municipal Systems Act 32 of 2000 (“the Act”). This typically requires submitting a written complaint that outlines the nature of the dispute and the specific issues to be addressed, which is then submitted to the municipal manager or office.

Upon receiving the complaint, the municipality is required to investigate the matter and resolve the dispute in a fair and timely manner. This requires the municipality to, among other things, review the account, verify the issues raised regarding the charges, and make adjustments or provide explanations for the charges levied. Ultimately, the dispute will be finalised in terms of the prescribed process, whether to the satisfaction of the consumer or not.

However, most consumers are concerned about the threat of their power or water supply being disconnected while the municipality investigates and determines the dispute.

In a recent decision of the SCA, in the matter between the City of Tshwane Metropolitan Municipality (“the City”) and Glofurn (Pty) Ltd (“Glofurn” / “the consumer”), the SCA considered whether the City is entitled to disconnect electricity supply to a consumer (Glofurn) pending the resolution of a dispute logged by the consumer in terms of s 95(f) read together with 102(2) of the Act concerning the charges levied by the City (“the dispute”).

Glofurn had installed a solar system on its premises; however, it still received significantly high electricity bills despite the installation. Glofurn lodged a dispute against these electricity bills and continued to pay the average amount it normally paid to the City. During this period, Glofurn continued receiving high electricity bills and accordingly fell into arrears.

The City threatened to disconnect Glofurn's electricity supply, given Glofurn's failure to settle the outstanding amounts. Glofurn argued that the dispute had not been resolved and that the City was precluded from disconnecting the electricity supply.

Glofurn initiated urgent legal proceedings in the Gauteng Division of the High Court, Pretoria, seeking an interim interdict to prevent the City from disconnecting its electricity supply pending the dispute's resolution. The High Court granted the interim interdict in favour of Glofurn, prompting the City to appeal the decision.

The SCA dismissed the City’s appeal and held that in terms of s 102(2) of the Act, a municipality is precluded from taking any debt enforcement action, such as disconnecting services, against a consumer pending the resolution of a dispute (which includes the exhaustion of the consumer’s right to appeal). This ensures that the customer's services are not unfairly interrupted while the matter is under review​​.

Municipalities are accordingly cautioned to ensure that disputes lodged under s 102(2) of the Act are resolved to finality prior to implementing any credit control mechanisms.

In addition, consumers, including corporations, can take heed of their right to dispute charges levied by municipalities. Municipalities are also not entitled to take credit control measures such as disconnecting water or electricity supply pending the resolution of a dispute.

Here are some key takeaways from the decision, essential for ensuring seamless business operations and productivity during a dispute with a municipality to prevent termination of services:

  1. Check the applicable bylaws, the municipality’s credit policy, and the requirements for dispute resolution and follow the process set out therein;
  2. The importance of continuous average payments for services to the municipality;
  3. Should the dispute remain unresolved, declare a formal dispute in terms of s 95(f) read together with s 102(2) of the Act with the municipality and emphasise that in terms of these sections, services may not be terminated pending a resolution of the dispute; and
  4. Whilst the dispute remains unresolved, the municipality may not terminate services to the consumer. Should the municipality threaten to terminate services, the consumer may approach a court on an urgent basis for the resumption of services. Bear in mind, however, that once the municipality’s prescribed dispute resolution process has run its course, and if the final finding is against the consumer, then the municipality may be entitled to terminate services, and the consumer, if still aggrieved, would then be required to take the municipality’s decision on review.


Wandile Ndabambi

Executive | Dispute Resolution


Michelle Casey

Associate | Dispute Resolution