Can Eskom be held liable for loadshedding?

In light of the fact that loadshedding has become a fairly normal occurrence for most South African citizens, it is hardly surprising that the aforesaid question has been raised on numerous occasions.

In the reportable case of Polyoak Packaging (Pty) Ltd v Eskom Holdings Limited (21218/2008) the court began to deal with this question. Eskom was and is solely responsible for the generation and supply of electricity, which the court viewed as an indispensable source of energy.

Polyoak operated an electricity driven manufacturing plant and instituted a claim for damages against the Eskom, due to its plant being idle during loadshedding. Eskom raised an exception to their clam.

Polyoak’s claim was founded in delict and they maintained that Eskom wrongfully and negligently caused them pure economic loss in that Eskom failed to take steps to prevent such loss.

Such conduct would only be considered wrongful if it is in breach of a legal duty and a legal duty only exists if legal and public policy considerations require Eskom to be held liable for Polyoak’s loss. The court held that consumers were entirely dependent on Eskom.

It further held that Eskom was aware of this and that Eskom was aware that consumers would suffer loss in the event of unplanned and unmanaged interruptions.

Since 1922 Eskom’s task of generating and supplying electricity has been controlled by a regulatory body controlled by statute. Eskom therefore performs a duty imposed by statute in the public interest.

The court then proceeded to determine whether the legislature intended for Eskom to be held liable in delict for any loss it may negligently cause. In terms of Section 12(3) of the Electricity Act provided that if the regulator were to take such steps against a defaulting licensee this would not “prejudice any civil claims which any consumer or other person may have against a licensee arising from his failure to fulfil his obligations in terms of the conditions of his licence”. This clearly indicates that the legislature has contemplated a private law remedy of an action in damages against Eskom if it breaches the terms of its licence.

On this point the court further held that legislative framework provides for the generation of electricity by other entities, which are not necessarily state owned or controlled. Aspirant licensees would be discouraged if Eskom was to be exempted from delictual liability and they were not.

Eskom further relied on the principle of indeterminate liability and submitted that our law, does not permit claims in delict which would or might lead to indeterminate liability of this kind. The court however rejected this argument and held that there was not an indeterminate class of possible plaintiffs herein.

The court came to the conclusion that the question whether legal and public considerations imposed a legal duty on Eskom to ensure a constant supply of electricity to Polyoak should not be decided on exception. The court held that further evidence would need to be heard in this regard and therefore the exception was dismissed with costs.