Acting as intermediaries, municipalities buy electricity from Eskom in bulk and then re-sell it to various customers (including homes, businesses and government). According to the utility, 42% of the electricity it generated in 2013/14 was sold to redistributors, such as municipalities¹.

Almost a third of income earned by municipalities (R21,9 billion) in the quarter ended June 2015 was through electricity sales, according to Stats SA’s latest Quarterly financial statistics of municipalities report².

Municipalities spent R15,2 billion to purchase electricity from Eskom, translating into a surplus of about R7 billion. Surpluses from these sales are used to offset costs incurred in the provision of other rates and general services (e.g. cemeteries, fire brigades and libraries).

Municipalities purchased 21% more electricity in the June 2015 quarter compared with the March 2015 quarter, rising from R12,5 billion to R15,2 billion. Contributing to this increase was the usual peak in electricity demand experienced in the winter months, as well as rising electricity tariffs.

What is striking is the dominance of South Africa’s eight metropolitan municipalities. The metropolitan councils purchased 65% (about R10 billion) of all electricity purchased by local government, despite only 40% of South Africa’s population residing in these areas³.

Johannesburg purchased the highest amount of electricity, which was the highest of any municipality, contributing 15% of the national total, followed by Ekurhuleni (13%), eThekwini (11%), and then Cape Town and Tshwane (both 9%).

It is important to note that not all municipalities take on an intermediary role. According to Eskom¹, 58% of the electricity it generated in 2013/14 was sold directly to industrial (25%), mining (14%), international (6%), residential (5%), commercial (4%) and other (4%) customers, without the help of local government. Of the 234 municipalities shown in the map earlier, 58 did not purchase electricity during both the March and June quarters of 2015⁴.

¹ Eskom: http://integratedreport.eskom.co.za/supplementary/app-electricity.php

²The Quarterly financial statistics of municipalities survey collects a range of financial data from municipalities. The report provides information on where municipalities source their income, and what they spend money on. Download the results for the survey here.

³Population figures for the year 2014 sourced from Stats SA’s Mid-year population estimates report. Download district and metropolitan population estimates here. https://www.statssa.gov.za/?page_id=1854&PPN=P0302&SCH=6012

⁴ Note that the map only shows local and metropolitan municipalities. Two district municipalities (Greater Sekhukhune and Umkhanyakude), not shown in the map, purchased electricity.