'Electricity tariffs can be lowered'

Eskom's requested electricity tariff could be lowered to about 10.8 percent and still be cost-reflective, Business Unity SA (Busa) said on Monday.

“If more detailed information had been provided it might have been possible to find further savings,” Busa said in a statement.

“According to research commissioned by Busa, an accelerative price path, at a lower rate, can be achieved without negatively impacting on supply security.

“These electricity price shocks now have significant adverse economy-wide impacts.”

Eskom applied to the National Energy Regulator of SA (Nersa) in October for a 16 percent increase in electricity prices each year for the next five years.

This would take the price of electricity from 61 cents a kilowatt hour in 2012/13 to 128 cents a kWh in 2017/18 - more than doubling it.

Busa said the Nersa consultative process was as essential in making the right decisions about future electricity tariffs.

“A number of key sectors in the SA economy, such as mining, minerals, and chemicals are heavily reliant on electricity as an input into their production processes,” the organisation said.

“These sectors often are highly trade-exposed and would seem to have limited ability to absorb the substantial increases in real electricity tariffs.”

The proposed electricity tariff increase would impact on the output of these sectors, employment and investment decisions, and would have a ripple effect throughout the economy.

Other less electricity-intensive sectors would also be adversely impacted.

“Therefore, the Busa analysis suggests that the tariff increases contained in Eskom's MYPD3 Multi-Year Price Determination application will have significant negative long-term implications for households, industries, and the economy at large.”

This made Nersa's interrogation of the MYPD3 cost estimates all the more crucial, said Busa.

Significant savings were available if a detailed cost assessment of Eskom's MYPD3 application was done.

Busa made this submission to Nersa last week. The research was done by Genesis Analysis, including inputs from Busa members.

The current Multi-Year Price Determination, MYPD2, ends on March 31, 2013. New tariffs will be implemented from April 2013.

Nersa will announce its final decision in February, following an extended period of consultation and public hearings. -Sapa