Cape Town - The government is facing more protests following widespread opposition to Eskom’s application to the National Energy Regulator for a 16.6 percent tariff increase.
The tariff application comes as consumers are being hit hard on all fronts – the falling rand, the drought and expected steep food price hikes.
Eskom has applied to the National Energy Regulator of SA (Nersa) to recover the money it lost through revenue under recoveries, higher expenditure on coal burn and other energy costs. If approved, the increase will come into effect on April 1.
Nersa started public hearings yesterday into Eskom wanting to recover, among others, R11.7 billion for a shortfall in revenue, R8bn in costs for open cycle gas turbine plants and R2.6bn in other energy costs.
The public hearings end on February 5 and a decision on Eskom’s application will be made on February 25, Nersa spokesman Charles Hlebela said yesterday.
The Right2Know (R2K) Campaign said today protests are to be held at the offices of the regulator across the country where hearings would be held to consider Eskom’s application. This protest adds to the opposition the government is experiencing from the #FeesMustFall students protest and the broad-based civil #ZumaMustFall campaign.
And the Cape Chamber of Commerce and Industry said consumers could not afford to help Eskom “claw back” R22.8bn by having electricity tariffs increased by 17 percent.
Cape Chamber of Commerce and Industry president, Janine Myburgh, said yesterday that it was unfair to expect the public to carry Eskom’s burden.
“We certainly do not believe that business and consumers can afford an increase of this magnitude on top of other increases that will flow from the weakening rand and rising import costs. Add to this the effects of the drought on food prices and it will be a major blow to the country.
“The proposed increase is to ‘claw back’ money already spent. The main reasons for the overspending were that Eskom completely overestimated the demand for electricity. Actual electricity sales were much lower than expected and this reduced Eskom’s income,” Myburgh said.
Dr Kenneth Creamer, economist at Wits University, said the drought in southern Africa and related rising food costs will put disproportionate pressure on poor households who spend a relatively high share of their income on food.
“The recent sharp weakening of the rand is expected to pass through into the South African economy in the form of rising prices of all imported goods. This dynamic will be somewhat mitigated by the fact that oil prices and global inflation has remained low, but it will be compounded by the effects of the drought and increasing food prices.”
At a macro level, these factors will fuel rising inflation and put upward pressure on interest rates in the year ahead, he said.
“The weaker rand has the potential to boost South Africa’s exports if there is sufficient demand by our foreign trading partners, but this increased competitiveness will be undermined if inflation rises too sharply,” Creamer said.
In a statement issued yesterday, Eskom said investors were seeking certainty and stability from the regulatory process and Eskom has recently been downgraded by rating agencies. A favourable regulatory clearing account process would improve investor confidence.
“Funding security ensures that the build programme remains on course for completion. Sufficient revenue allows Eskom to continue with the generation performance improvement programme to the benefit of all customers,” the statement read.
National Consumer Commission spokesman Trevor Hattingh said consumer disposable income would be reduced and with electricity being a fundamental commodity to many sectors, an increase in electricity tariffs was likely to have a ripple effect on costs for goods and services.
“The Right2Know Campaign strongly opposes Eskom’s Regulatory Clearing Account (RCA) application,” the organisation said.
“Eskom submitted its RCA application for consideration by the National Energy Regulator (Nersa) in November last year. According to the National Regulator, Eskom has applied for an RCA balance of R22.8bn.
“R2K will be protesting outside the Nersa public hearings that will be hosted across the country from January 18. As part of the public, we demand full information, full participation and a fair process. How can we be expected to fully participate in these processes when there’s no transparency around matters like the nuclear deal and all the energy-related decisions taken..”
The Nelson Mandela Bay Business Chamber in Port Elizabeth also said yesterday that it strongly rejected proposed additional increases in electricity tariffs for 2016.
Chamber communication manager, Cindy Preller, said that the chamber was lobbying for members on sustainability. Citizens and businesses in Nelson Mandela Bay could not afford increases and once granted, this application would not create an environment for business to be globally competitive.
CAPE ARGUS