Eskom power lines near the Ankerlig Open Gas Turbines. Picture: Henk Kruger/African News Agency (ANA)
Cape Town - The disaster at power utility Eskom has reached a stage where its problems can no longer be solved by price increases and drastic action is now required, the Cape Chamber of Commerce and Industry said.

President of the chamber Janine Myburgh said price increases would in fact make things worse and reduce Eskom’s chances of recovery.

“One of the problems was that Eskom’s request for three 15% increases for the next three years did not tell the full story. Nersa has already granted an increase of 4.41% and when we add this to 15% we are already looking at an increase of nearly 20% in year one. The next 15% increase will be applied to a tariff that has already been increased and the third 15% increase will apply to a tariff that has already been increased twice so the total increase over three years will be nearly 59% and not the 45% that has been reported,” she said.

Myburgh said the second problem was that demand for electricity was falling as people turned to alternatives like gas, more efficient electric appliances and LED lighting. “The only solution was to reduce costs,” she said.

“We know from independent studies that Eskom is over-staffed by about 60% and that salaries are much higher than similar utility companies in other countries. Eskom has made a start with drastic cuts to its executive and management staff but it needs to do this at all levels of the organisation and do it quickly,” said Myburgh.

The second problem was the tariff increase over three years would make many companies and households decide to install solar panels.

“PV solar panels already make economic sense and with a 59% tariff increase in the pipeline, going solar is now a no-brainer for many,” she said.

Chief executive at Energy Partners Solar Manie de Waal said power purchase agreements overcome energy challenges by allowing businesses to buy electricity from solar power providers at reduced rates, without owning or maintaining infrastructure.

“This means the responsibility of gaining approval from Eskom and local municipalities, as well as registering large renewable projects, is taken on by expert service providers with extensive experience in making these types of processes go through seamlessly and within the required time frames,” he said.

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Cape Argus