Eskom slammed over proposed rise in tariffs

Eskom’s plan to increase electricity tariffs has been met with stiff opposition. Picture: SAFRICA-ESKOM/TARIFFS

Eskom’s plan to increase electricity tariffs has been met with stiff opposition. Picture: SAFRICA-ESKOM/TARIFFS

Published Jun 30, 2024


Eskom’s plan to increase electricity tariffs has been met with stiff opposition.

The South African Federation of Trade Unions (Saftu) has opposed the proposed tariff increase.

This was after the power utility proposed to increase electricity tariffs by 36.5% in 2025.

The utility stated that the delayed implementation of South Africa’s renewable programme has pressured it to increase its generation capacity.

If the National Energy Regulator of South Africa (Nersa) approves the proposal, the increase will take effect on July 1, 2025.

In addition, the utility also plans to have another increase of 43.55% in 2026, 3.36% in 2027 and 11% in 2028. The first increase for these subsequent years is set for July 1, 2025.

Saftu said this means a household with an average consumption of 900kWh could find themselves paying an additional R1 600 per month.

The federation said this proposal comes on the heels of a 12.74% increase in electricity tariffs which came into effect in April 2024. This was an 18.65% increase in April 2013; 9.61% in 2022; and 15% in April 2021.

The union added that this series of increases has placed a significant financial burden on South African consumers, particularly working-class households who are already struggling with the economic burdens of unemployment and the rising cost of consumer goods.

Eskom on Friday said it was not in a position to comment on information that was still under consultation.

“Eskom must respect the confidential consultation process with the South African Local Government Association (Salga) and the National Treasury. Once the regulator Nersa has published the revenue application according to its processes, Eskom will engage on the matter,” it said.

Saftu’s general secretary Zwelinzima Vavi said the proposed tariff increases by Eskom must be viewed in the context of long-term trends in electricity prices.

Between 2007 and 2024, electricity prices in South Africa increased by more than 539% nominally.

“The current proposal, if implemented, will only continue this trend. Higher electricity costs will only make it harder for people to afford a living especially because it is a basic good required to heat homes, for cooking and heating water,” Vavi said.

He said the history of mismanagement, corruption and looting has sabotaged the utility’s financial health, putting it in a condition where it perpetually seeks investments to stay afloat. Vavi said fiscal austerity has, however, disadvantaged the power utility with the government refusing to invest heavily in it.

“It has agreed to a debt relief premised on Eskom being prohibited from investing in the new generation. The defunding of Eskom corresponds with the corporatisation model which has made Eskom rely on its balance sheet to survive. This has effectively pushed it into a situation where it has to raise money through sales and profits.

“However, additional factors include the Independent Power Producers (IPPs) introduced as part of the structural reforms to liberalise the energy markets. In previous tariff hikes, the IPPs submitted requests for hikes of not less than the inflation rate. These requests were factored into applications for tariffs by Eskom that were subsequently approved by Nersa. In April 2023, the IPPs’ tariff request contributed one-third to the total tariff,” said Vavi.

He added: “Corporatisation, IPPs profit margins and corruption have combined to compel Eskom to raise tariffs to cover costs of operation. This suggests that Eskom shifts its financial burdens onto consumers, particularly households and small businesses. Municipalities rub pepper on the wound when they add surcharges to the electricity they supply to residents.”

He added that by prohibiting Eskom from building new generation capacity with the debt-relief, the government is aimed at privatising the power generation without a genuine decarbonisation plan driven by the public. Vavi said this approach does not address the underlying issues within the energy sector which are centred around the energy transition and building of renewable capacity.

“By giving the transition to the private sector, the government will subject us to corporate and profit motives which would either exacerbate or retain the energy poverty we have today.

Vavi said his federation wants Free Basic Electricity (FBE) for working-class people. He said the FBE would not be achieved under market competition, meaning even a dummy FBE that the government claims to be giving to millions of households would be eradicated to make way for the market-regulated provision of electricity.

Meanwhile, lobby group AfriForum has taken the National Nersa to the North Gauteng High Court to interdict a possible 12% electricity price hike for municipal consumers, set to take effect next month. The group said Nersa’s inability to comply with legislation was negatively affecting consumers.

Sunday Independent