Eskom Holdings SOC Ltd and Another v Sonae Arauco (Pty) Ltd

Sonae Arauco (Pty) Ltd, a wood-based panel manufacturer and major electricity consumer in Mbombela Municipality, alleged it concluded an oral electricity curtailment agreement with the municipality in 2020. The agreement purportedly allowed Sonae to be excluded from loadshedding on condition that it reduced its electricity consumption to 70% of normal usage. During 2023, either Eskom or the municipality implemented loadshedding at Sonae's factory. Sonae brought an urgent application for interim interdictory relief, claiming the loadshedding breached the curtailment agreement and threatened fire risks, job losses, and harm to the local economy. It sought to interdict Eskom and the municipality from implementing loadshedding at its factory. Eskom contended that it was obliged under the Electricity Regulation Act 4 of 2006 and NRS048-9:2019 Code to implement loadshedding after the municipality failed to shed required load. The municipality denied concluding a valid curtailment agreement and asserted it lacked authority to conclude such an agreement outside statutory prescripts. The high court granted the interim interdict, finding Sonae had established all requisites for interim relief.

• Whether the interim order of the high court was appealable
• Whether Sonae established a prima facie right to exemption from loadshedding based on an alleged oral curtailment agreement
• Whether the alleged curtailment agreement complied with the requirements of the NRS048-9:2019 Code of Practice
• Whether the Codes published under s 35(2) of the Electricity Regulation Act have external binding force on customers, licensees and municipalities
• Whether Eskom was legally obliged to implement loadshedding where the municipality failed to shed required load
• Whether Sonae demonstrated reasonable prospects of success in obtaining final relief
• Whether the balance of convenience favoured granting interdictory relief against loadshedding
• Whether the grant of an interdict restraining exercise of statutory functions complied with separation of powers principles

The appeal was upheld with costs including costs of two counsel. The high court's order was set aside and replaced with an order dismissing Sonae's application for interim relief in terms of Part A of the notice of motion, with costs including costs of two counsel where employed.

The binding legal principles established are: (1) Codes published by NERSA under s 35(2) of the Electricity Regulation Act 4 of 2006 have external binding force and regulate the relationship between licensees, municipalities and customers regarding loadshedding implementation; (2) Eskom bears ultimate statutory responsibility under the Grid Code and 2019 Code to implement loadshedding where necessary to protect grid integrity, including where municipalities fail to shed required load; (3) Load curtailment agreements must comply with Code requirements, including being in writing, meeting minimum feeder usage thresholds, and providing measurable and verifiable load reduction; (4) Where a municipality fails to demonstrate capacity to reduce demand by at least 80% of required amounts or fails to provide required information, Eskom is obliged to shed bulk supply points to that municipality; (5) An applicant for interim interdictory relief must demonstrate not only a prima facie right, irreparable harm, absence of alternative remedy and favourable balance of convenience, but also reasonable prospects of obtaining final relief; (6) Courts must exercise particular caution before granting interdicts restraining exercise of statutory executive functions, and must do so only in the clearest cases where proper justification exists; and (7) The constitutional right to electricity supply is not absolute and is subject to lawful regulatory frameworks for loadshedding when grid capacity is exceeded.

The Court made several obiter observations: (1) It distinguished the case from Eskom Holdings v Vaal River Development Association, noting that case concerned termination for non-payment under s 21(5) rather than loadshedding for grid protection, and involved different notice requirements; (2) The Court commented that without electricity, essential services including water, health, travel, internet and banking would be interrupted, and a national blackout could take up to two weeks to remedy; (3) The Court observed that loadshedding is "an inconvenient but necessary tool" to prevent grid collapse; (4) It noted that Sonae's reliance on legitimate expectation was abandoned during argument; (5) The Court commented that Sonae's claims of irreparable harm were "insubstantial and tenuous," particularly the fire risk assertions which were not properly explained; (6) The Court observed that the high court's reliance on the minority judgment in Vaal River was misplaced given the distinguishable factual circumstances; and (7) It noted that Sonae had not explained how it averted the alleged disastrous consequences when loadshedding was implemented at its factory in December 2022.

This judgment is significant in South African law for several reasons: (1) It clarifies that Codes published by NERSA under s 35(2) of the Electricity Regulation Act have external binding force on licensees, municipalities and customers, not merely internal regulatory effect; (2) It establishes the hierarchical framework for loadshedding implementation, confirming Eskom's ultimate statutory responsibility to protect grid integrity when municipalities fail to shed required load; (3) It interprets the requirements for valid load curtailment agreements under the 2019 Code, requiring written agreements, minimum 80% feeder usage, and measurable/verifiable load reduction; (4) It applies separation of powers principles to interim interdicts restraining exercise of statutory executive functions, requiring courts to exercise particular caution and grant such relief only in the clearest cases; (5) It addresses the non-absolute nature of the constitutional right to electricity supply, subject to lawful regulatory frameworks for grid protection; (6) It provides guidance on appealability of interim orders that are final in effect and impact statutory functions; and (7) It balances individual commercial interests against broader public interests in maintaining electricity supply and preventing grid collapse.