With loadshedding implemented yet again just last week, Capetonians can’t be blamed for being fed-up with Eskom as it presses ahead with an application to the National Energy Regulator of South Africa (Nersa) to hike the price of electricity by 20,5% from Friday 1 April.
Jacques Moolman, president of the Cape Chamber of Commerce and Industry, says South African consumers have enjoyed relatively low electricity rates. However, he says, the inability of Eskom to guarantee supply, the history of wasted money and reported corruption, followed by large tariff increases is what angers the consumer.
“The onus should be on Eskom to ensure that funds are spent correctly and prudently,” Moolman says, “to slim down its overweight staff complement, to maintain its energy generating facilities and stop regarding its customers as a bottomless pit of cash to be dipped into whenever it needs more money.”
On Friday 3 December last year the North Gauteng High Court ordered Nersa to make a revenue decision on the public electricity utility’s proposed hike by Friday 25 February this year “in accordance with the Nersa Eskom Retail Tariff and Structural Adjustment (Ertsa) methodology”.
Last month, Nersa held virtual public hearings with relevant stakeholders to determine how much more consumers are prepared to pay for electricity.
Fin24 reported that interested parties participating in the online public hearings appealed to Nersa to ignore its methodology and refuse to award the increase on the basis that consumers could not afford them (“ ‘It’s out of our control’: Eskom fights for 20,5% hike in April”, 17 January).
However, members of the Nersa electricity panel told presenters that while they sympathised with their plight, their hands were tied by legislation methodology.
Going by this statement, it seems things are not looking good for business and consumers.
With Nersa’s decision deadline just over two weeks away, Moolman says, should the 20,5% electricity hike be approved, the impact of increased electricity prices will drive down consumer demand as households will have less disposable income.
“Most businesses will, unfortunately, have to pass a portion of the growing electrical cost on to their clients,” he said. “It will negatively affect all businesses and all households on the electricity grid and the ripple effect will raise prices across the economy.”
But will businesses be able to afford yet another financial setback after the many experienced as a result of the Covid-19 pandemic?
Moolman says the pinch will specifically be felt by those industries that trade in non-essential services and products, such as restaurants and tourism, that are just starting to recover.
“With rising interest rates and increased energy tariffs, consumer spend will be negatively affected,” he says.
Moolman adds that such a steep rise will lead to more enterprises making every effort to become completely energy independent.
“But, unfortunately, not everyone can afford to go off-grid. To add injury, those generating their own electricity intermittently and depending on Eskom when there is a need may see a drastic increase in Eskom’s charges in the future if Nersa’s proposed tariff structure is accepted.”
Cape Town Mayor Geordin Hill-Lewis was among the stakeholders who made oral submissions at Nersa’s public hearing held on Monday 17 January.
Addressing the panel, Hill-Lewis said the price of electricity had risen by 307% over the past 13 years, “far exceeding inflation.
“Over and above the 20,5% increase applied for this year, the City has also noted that further increases are planned in future, including an increase of 15,07% in 2023-’24 and of 10% in 2024-’25,” he said, adding that making struggling consumers – “who already pay far too much for electricity” – responsible for Eskom’s commercial issues was unacceptable.
In reply to the loadshedding, which kicked in last Wednesday (2 January), Hill-Lewis said that within the next two weeks, the City would publish documents detailing their upcoming procurement of power from independent power producers (IPPs). He said this would include the announcement of tenders for the purchase of electricity from IPPs and timelines for bringing IPP-generated electricity onto the City’s supply network.
“Bringing IPPs onto the grid, through the tendering process, is a crucial step in ending loadshedding over time,” Hill-Lewis. “The economic effects of a reliable power supply in Cape Town will mean more profitable businesses and more job opportunities. Every Capetonian will benefit.”
Whether other government spheres stand in the way of such plans remains to be seen.
