In City of Cape Town v National Energy Regulator of South Africa and another (Case No. 51765/17, Gauteng Division, Pretoria) [2020], the High Court dealt with a dispute about the purchase of renewable energy from independent power producers (IPPs).

Several years ago, the City adopted the approach that it would be best to diversify its energy sources by buying electricity directly from IPPs. This would also be more environmentally friendly and cost effective. To do so, an IPP would have to be licensed by NERSA before operating a power plant and selling its output to the City.

NERSA stated that it could not issue such a licence until the Minister of Energy had made a determination that a new power plant was needed. The City refuted this, saying that such a determination was not required. The parties could not reach agreement.

In a recent judgment, the High Court held that this was an intergovernmental dispute. Accordingly, the City, NERSA and the Minister were bound by the principles of co-operative government, as apparent from Chapter 3 of the Constitution and the provisions of the Intergovernmental Relations Framework Act 13 of 2005 (IRFA). They were required to have tried to cooperate with each other first, before resorting to litigation.

The High Court referred the dispute back to the parties, obliging them to make all efforts to reach settlement in terms of the Constitution and IRFA before attempting to return to court.