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We need to reconsider the model of SA’s energy distribution

David Robert Lewis writes that so long as SA myopically persists with its strange obsession with maintaining the Eskom energy monopoly, there will be load shedding and blackouts. Picture: Armand Hough/African News Agency(ANA)

David Robert Lewis writes that so long as SA myopically persists with its strange obsession with maintaining the Eskom energy monopoly, there will be load shedding and blackouts. Picture: Armand Hough/African News Agency(ANA)

Published Oct 16, 2022


So long as this country myopically persists with its strange obsession with maintaining the Eskom energy monopoly, there will be load shedding and blackouts.

Consumers desperately require choices in energy providers and options on who can connect their home grid to power the toaster and microwave oven. But practically nobody here is speaking out on the lack of consumer choice when it comes to electricity.

It’s as if energy analysts are brainwashed morons flogging the proverbial dead horse, each year they call for inquiries into why the horse died, reclassifying the dead horse as “living impaired”, arrange for officials to visit other countries to “see how they ride dead horses”, call for additional funding and training to “improve the dead horse’s performance”, or the hiring of outside contractors to “ride the dead horse”, and so on, but are simply too afraid to “let go of the horse”, lest they be out of a job.

What is wrong with you people? A decade ago, I attended a talk by David Lipshitz, founder and CEO of MyPowerStation, a company which aims to provide a “virtual power station” solution via online billing and provisioning of energy services to consumers.

His magnificent idea of introducing information technology to the sale of electricity to the enduser and consumer has been stymied by a regulatory environment more in keeping with a 19 century model of distribution than the 21st century.

Lipshitz’s website is now merely a link to his book, The Last Blackout, available via Amazon.

“What would happen if city dwellers in cities with more than 1 million people suddenly had no electricity?” asks Lipshitz in an “electrifying, shocking, and powerful thriller” that is too close for comfort.

The past week has seen some areas of South Africa experiencing 9-hour blackouts. The weekend was a series of six hours of load shedding for my own household.

South Africa’s model of energy distribution requires urgent and drastic intervention. And I don’t mean to re-engage the debate on where our electricity should be coming from, in other words, how it is produced.

Doing so merely adds to the pile of doggy-doo dolled up by consultants, analysts, and self-proclaimed experts dished up on national television on a daily basis.

Whether or not electricity is provided by the state or Independent Power Producers (IPPs) is of no real consequence in a system in which the end-user is placed at the forefront. There are no rational reasons why consumers should not be given the choice of purchasing energy from sustainable resources, whether women-owned utilities, or listed companies with a high ESG and BEE component.

Let the people decide. Unfortunately, and despite the mooted plans to open Eskom’s grid to the “wheeling of energy” by third parties, there remain obstacles. The first is that our government, and especially its Marxist Energy Minister Gwede Mantashe, continue to embrace a blind focus on centralisation.

You can read my piece on why the state is rooted in an ideological fixation, the problem of “Socialist Complexity”, and my proposal for an Energy Commons. I continue to believe a commons is a “way out of the debt trap”.

Eskom is heavily in debt and clearly unprofitable when it comes to the generation of electricity, and is a prime example of why governments and bureaucrats are less efficient than the market and free enterprise when it comes to allocation of capital, which is why we continue to see the introduction of tariff increases several times over the inflation rate.

Is more money really going to solve the problem? Not when we have the bizarre situation in which our municipalities and metros, alongside the corner café “prepaid token” store, are all added to the game of profiting off the bulk sale of electricity, energy provided by a grossly inefficient pyramid scheme by a solitary, under-performing producer of electricity.

Nobody is fooled by people like Cape Town mayor Geordin Hill-Lewis, promising the City will bring new capacity online, give or take a megawatt, or our President Ramaphosa, racing home to declare yet another electricity crisis requiring a crisis committee.

Without actioning on our rights as consumers, rights enshrined in our Constitution, we will be left in the dark. It is essential for Eskom to open up the grid, not only to the “wheeling of electricity” but to the dealing and virtualisation of billing and provisioning of new services. Then we might take a cue from New Zealand, where deregulation has proven incredibly successful.

The country has five major electricity-generating companies. Genesis Energy, Mercury and Meridian Energy operate under a “mixed ownership model” in which the government holds a majority stake; Contact and Trustpower are private sector companies. The country once struggled with a system very similar to our own before dumping a socialist government.

Sadly, despite promises, there appear to be no genuine enabling legislation nor incentives in South Africa to allow a third party to purchase electricity from either the state or the IPPs, and to resell the result on the open, rather than a captive, market to the consumer. This is clearly why our system is failing. Embracing Lipshitz’s modest proposal and learning from the example of New Zealand would be a step in the right direction.

In fact, one does not have far to travel to examine the case of another state monopoly to see why deregulation, when it comes to South Africa, is the only solution. The fate of Telkom, once the country’s sole cable monopoly, provides us with a good case in point. If we had not opened up, we would still have a situation in which the only telephone available was from the same company, with a single colour, beige. Left to its own devices (excuse the pun), Telkom would still be in the copper age.

Look at how ISPs (Internet Services Providers), just like IPPs, began to emerge in the ’90s while our government, to its credit, allowed a semblance of competition (initially only in the mobile market). As a result, these companies grew up and essentially outflanked Grandma Telkom. In the process, provisioning fibre cable infrastructure to the suburbs and FTTH (fibre to the home), all of which cost the taxpayer not a single penny.

Given enough time, our IPPs might eventually begin rolling out similar infrastructure. In fact, they would be negligent if they did not. Best to get Eskom into open competition mode as soon as possible. The alternative is living with a permanent threat of massive grid failure just around the corner, alongside a collapsed economy.

*David Robert Lewis is publisher of the popular Medialternatives website.

** The views expressed here are not necessarily those of Independent Media.

Cape Argus

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