'Eskom wanting a tariff increase is ludicrous' say experts
As the country experienced its second week of load shedding, which has had a severe impact on businesses and residents, Nersa announced its timelines to consider Eskom’s Regulatory Clearing Account (RCA) application for the 2018/19 financial year.
Energy expert Ted Blom said he had estimated that the tariff increase would range between 12 and 17%, based on Eskom applying to recover R27billion in its 2018/2019 RCA application.
The RCA , which is part of the multi- year price determination methodology, allows Eskom to adjust for the over- or under-recovery of revenue in any year of a tariff decision.
In the RCA submission, Eskom stated that their application was due to costs and differences in revenue received.
“Revenue impact of load shedding was not included in the RCA balance. The key cost variances were in coal, open cycle gas turbine fuel, depreciation, employee benefits and maintenance,” said Eskom.
Blom said that with the increase, consumers would see a substantial rise in the price of electricity.
“If we allow Eskom to succeed, we’ll see a substantial jump. However, as the increase is over and above their annual tariff hikes, in reality your electricity costs will double in two years,” he said.
Blom said that while he would not expect Eskom to be allowed to charge the public for the load shedding, the power utility did charge the public for lower sales as a result of the steep price increases.
Right2Know’s Busi Mtabane said Eskom was putting pressure on already overburdened consumers, especially the poor, who could barely afford the current rates. “Eskom must accept responsibility for its own problems and come up with alternative solutions.”
Mtabane said the public should not have to pay for ongoing corruption, mismanagement and wasteful expenditure.
“We’re calling on communities, organisations, and individuals to make their voices heard by participating in the public hearings.” She said the government must invest in more sustainable, efficient and affordable energy options like solar and wind power.
The Organisation Undoing Tax Abuse (Outa) said they had looked at Eskom’s application and believed that the business model was flawed.
“Eskom continues to apply for raised prices to cover escalating costs and assumes a captive public can and will pay,” said Outa’s parliamentary adviser, Liz McDaid. She said the mechanism that allowed Eskom, which failed to reach its sales targets, to apply to the government to bail it out was outdated, flawed and economically unsustainable.
“Outa intends to submit written comments against Eskom’s application for the R27bn clawback,” she said.
McDaid added that Outa had been vocal about the RCA process which allowed Eskom to claim back any unforeseen expenses it incurred during the preceding year.
“Outa believes it is time to rethink the entire RCA mechanism,” she said.
South Durban Community Environmental Alliance (SDCEA) spokesperson Desmond D’Sa said people were already suffering due to the high cost of electricity and load shedding. “This is a tragedy. The government has failed poor people all over this country.”
D’Sa said if the tariff increase went ahead it would impact not only businesses but schools. “I hear principals talk about their electricity bills of R40000 and above and these aren’t model C schools but poor schools in the townships. Parents would also have to pay extra school fees,” he said.
D’Sa added that pensioners and grant recipients were already paying R800 a month for electricity and water. “If you’re looking at about 12-17%, that will come to over R100 and mean that out of the R1500 they get, they’ll only have R500 left for food and other costs.
He said the SDCEA would oppose the increase. “We’re going to have to call the communities together and not allow this to go through.”
Economist Mike Schüssler said the situation with Eskom was destroying the economy. “Eskom needs to get its house in order first. I think we need to go through their coal contracts and the number of people that they employ.”
Schüssler said South Africans could no longer afford the high level of increases in electricity.
“I don’t believe that they’ve told us the truth yet. This 17% is going to come on top of the 6-8% that they’ve already got, so that’s really going to rocket our inflation rates,” he said.
Schüssler added that the problem was that only some people paid for electricity, while many towns and households chose not to pay any more.
Stakeholders who have an interest in Eskom’s 2018/19 RCA application can send written comments to [email protected], or hand-deliver to 526 Madiba Street, Arcadia, Pretoria or post to PO Box 40343, Arcadia, 0083, Pretoria, South Africa.
The closing date for written comments is January 20 at 4pm.
Public hearings on the matter will be held in February.
Members of the public and stakeholders who want to present their views at the KwaZulu-Natal hearing in Durban on February 6 must submit their request via email to [email protected] by 3.30pm on January 27.
A decision will be made by the National Energy Regulator of SA (Nersa) in March. Eskom’s RCA application is available on the Nersa website at www.nersa.org.za under ‘Consultation > Notices > Electricity’.