Consumers worry over suffocating Eskom tariffs

Nersa announced it had made “a significant decision” in making its rulings more transparent. | Antoine de Ras

Nersa announced it had made “a significant decision” in making its rulings more transparent. | Antoine de Ras

Published Mar 16, 2024


Durban — Households are caught between a rock and hard place as they try to navigate a difficult course through the high cost of living, and the increases in electricity prices will suffocate many of them.

This is the view from different quarters including business and civic bodies as municipalities are set to forge ahead with Eskom-aligned electricity price hikes.

This week the eThekwini Municipality confirmed that the increases would be applied from July 1, in line with the start of the new financial year for municipalities. Although not spelling out the prices, municipal spokesperson Gugu Sisilana indicated that any possible increases in electricity were benchmarked according to the National Energy Regulator of South Africa (Nersa) tariffs.

“Please refer your question to Nersa on what they consider as contributing factors when determining what the tariff benchmarks and guidelines to municipalities across the country should be,” she said, adding that tariffs would be determined in consultation with communities and various sectors at the City’s budget hearings.

In a statement released on Friday, Nersa announced it had made “a significant decision” in making its rulings more transparent.

The energy regulator said it had, at a meeting on February 23, “made a significant decision regarding the processing of high-profile decisions by its subcommittees, particularly the electricity subcommittee and the petroleum pipelines subcommittee”.

“It resolved that all subcommittees would no longer withhold the exact number or decision, for example, the total percentage of allowed tariff/revenue being recommended to the Energy Regulator for approval in high-profile matters,” the statement said.

This decision was in keeping with Section 8(9) of the National Energy Regulator Act, which mandated that all Energy Regulator meetings should be open to the public, with the exception being when discussing information that would require the energy regulator to refuse access under the Promotion of Access to Information Act.

“In the past, the Energy Regulator would withhold certain information from the public until the final decision was published and regulated entities were informed of the decision.

“This decision is a step towards greater transparency and accountability in proceedings, particularly in cases involving applications from entities such as Eskom and Transnet.”

Sisilana said tariff increases were implemented across the entire municipality and disputes should be referred to the nearest customer service outlet.

The South African Federation of Trade Unions (Saftu) said the increases were the result of “thugs that were costing Eskom through financial leakage due to sabotage, mismanagement, and looting and the power utility sought to recover these costs through the consumer”.

“Eskom continuously incurs losses which it recovers from poor customers by hiking electricity prices. The primary costs constitute the greatest portion of Eskom’s cost recovery requests. They are elevated because a portion of those costs goes to procuring diesel to mitigate unscheduled breakdowns of power stations,” said Saftu general secretary Zwelinzima Vavi on Friday.

According to the federation, the major concern is the cost to Independent Power Producers (IPPs) which constitutes 21.8% of the total tariff requested by Eskom. The cost of guaranteeing the IPPs a market and a “reasonable return” is burdening working class households and widening energy poverty in South Africa.

The head of Energy and Electricity Distribution at the South African Local Government Association, Nhlanhla Ngidi, said the increases had a negative impact on the overall financial performance of municipalities, and the current formula needed a rethink.

“The electricity increases will continue to drive the paying customers to off-grid solutions which will end up leaving municipalities with the poor and non-paying customers. This will cripple the already deteriorating revenue base of municipalities. This has been the case in the last five to 10 years with the sharp increases from Eskom. This is evident in more municipalities, including some metropolitan municipalities recently falling into the Eskom debt trap,” said Ngidi.

South African National Civic Organisation KZN secretary Sizwe Cele expressed reservations about the increases, warning of a dire impact on households because most were already battling.

Independent on Saturday