Electricity Resellers: The Cowboy Era Has Ended

The national energy regulator (Nersa) has published long-awaited guidelines for electricity resellers, making it very clear that they have to charge end-users the same tariffs and provide the same standard of service as the licensed distributor in the same area (Eskom or the municipality).

An electricity reseller is an entity whose core business is to resell electricity to a number of customers that are individually metered, beyond a bulk supply point. It includes many sectional title residential complexes, shopping malls and office blocks where the property owner, body corporate or a service provider appointed by them, resell electricity to occupants of individual units.

Chairman of the Electricity Resellers Association of South Africa (Erasa) Byron Taylor said Erasa members should be compliant since the guidelines are at first glance in line with the Erasa code of conduct. There are however many, especially smaller resellers who charge “management fees on top of management fees and service fees on top of service fees”.

Taylor said Erasa represents about 70% of the bigger resellers.

Eric Bott, technical director of Energy Measurement Consulting, that does investigations on behalf of retail clients, told Moneyweb that he recently found resellers to have over-recovered more than R30 million on the electricity bills at 36 shopping malls countrywide. At one site a client was being overcharged by R110 000 per month.

Moneyweb recently saw proof that a tenant in a flat in Sunnyside, Pretoria, was overcharged by at least 100% on his electricity tariff by a big property management company. When he questioned the charges, he was threatened with the termination of his contract.

In terms of the guidelines, electricity resellers have to register and conclude a service level agreement with their licensed distributors, which might be Eskom or the local municipality. The reseller’s distribution network has to comply with safety standards and the licensed authority (municipality or Eskom) should be given access to inspect the network.

Resellers may limit or disconnect the electricity supply to a customer only as a result of non-payment, as prescribed by the Electricity Regulation Act. All customers within a development have the right to request supply directly from the licensed authority, the guidelines state.

The reseller is obliged to supply customers with information on tariffs and tariff structures to enable them to check their bills.

Nersa further directs that reseller bulk tariffs, that are part of the approved tariffs in most metros, should enable the reseller to make a profit while selling to the end-user at the same tariff, as they would have paid if they bought directly from the licensed distributor.

The reseller is not entitled to recover “the cost of running their own electricity business” through the sale of electricity, but should recover that through the levies on sectional title units. This includes the cost of “maintaining their property and administering their own contracts with the end customers”.

Nersa further directs that no additional costs may be levied for meter reading, vending, billing and compliance services, “since these costs are already included in the relevant tariff”.

If a reseller charges an end-user more than the approved tariff, the reseller may face civil claims for the recovery of the amount as well as interest, Nersa states.

The guidelines stipulate the details that have to appear on bills and prepaid receipts. It further specifies that the amount of units of electricity and applicable tariffs charged for common areas such as parking space, should be clearly stated and divided by the number of units in the complex.

Resellers have to pass on free basic electricity to users who qualify and may claim the cost back by registering them with the licensed distributor.

They have to provide a service to test electricity meters when customers request it and provide contact details for customers to contact them at any time in case of power failures, to which they have to respond “suitably”.

The reseller should provide a complaints facility, the details of which should appear on the electricity bill or invoice. Customers should direct complaints to the reseller first, failing which he/she should approach the licensed distributor and if that fails, he/she will have recourse to Nersa.

Nersa member for electricity Thembani Bukula told Moneyweb that deviation from the guidelines will only be allowed with good reason. He said the Department of Energy is expected to publish new licensing regulations within the next three months, where after Nersa will publish rules for resellers.

Orginal Article – today.moneyweb.co.za