No escaping power hikes

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Christopher Motabogi

Electricity supplier Eskom is adament that electricity tariffs have to be hiked dramatically over the next few years ‘to keep the lights on’.
The National Energy Regulator of South Africa’s (Nersa) hearings into Eskom’s proposed revenue application price determination continued with the Free State leg held in Bloemfontein this week.  Opposition to the company’s proposed 16% electricity price hike continued with some in attendance accusing Eskom of being “less than honest” about the “real impact” of the proposed hike on consumers.

Eskom’s Mohamed Adam told a Nersa four-man committee that his company “is acutely aware of the impact of tariff increases on the economy, particularly, poor households”, but also “needed to balance other objectives like securing supply of power, financial sustainability, economic growth and job creation”. Adam says Eskom faces serious challenges including rising coal costs (needed to generate electricity) and the country “has had tariffs that haven’t reflected the costs of supplying electricity”.
Other speakers attending the hearing had opposing views.

Leon Kritzinger from Centlec, a Mangaung electricity supplier, criticised Eskom for its threats to disconnect municipalities who owe it money; with one Free State municipality, according to him, currently in a similar position. Kritzinger says neighbouring countries also owe Eskom millions, with no threat to them being disconnected. Meanwhile, Free State Agriculture president Dan Kriek asked Nersa to “proceed with caution” before accepting Eskom’s 16% electricity hike proposal. He says food prices will most certainly go up, with job losses in the agricultural sector.

Willem Boshoff of the Property House Group says the Eskom increase would drive businesses away from zoned areas, like malls, to residential areas due to rising costs.  “I think all businesses and stakeholders will have to sit with government, that they realise the severity and seriousness of the situation. We’re now at the point of survival. The cost of electricity in our country is probably the single biggest challenge to our financial future and prosperity in South Africa,” says Boshoff.  Cosatu’s Sam Mashinini says the proposed increase will only serve to exacerbate the already gloomy economic outlook for the country. The labour federation says South Africans are simply not in a position to pay higher electricity prices.

However, Eskom’s Group Executive responsible for Customer Services, Tsholofelo Molefe, says Eskom’s proposal aims to simplify residential tariffs for Eskom customers and to protect the poor with lower than average increases.
She gave the assurance that the indigent (poor residents) would continue to receive free basic electricity of 50 kilowatt per household per month.