Eskom has applied for a 20.5% tariff increase for the 2023 financial year, which analysts and politicians said punishes its customers for its own failures by making them pay more for electricity.
Two major business chambers and the City of Cape Town are pushing for the National Energy Regulator of South Africa (Nersa) to reject Eskom’s tariff application.
According to Cape Town mayor Geordin Hill-Lewis, the city’s stance is clear.
“We simply cannot afford these increases. They are unfair, unaffordable and unjust,” he said.
In total, 30,675 Capetonians signed a petition published by the City on Friday 14 January, calling on Nersa to refuse Eskom’s application.
Radio 702’s Bruce Whitfield spoke to Melanie Veness, the vice-chair of the Association of South African Chambers (ASAC) and CEO of the Pietermaritzburg & Natal Midlands Business Chamber (PMCB) regarding the tariff application.
“I think the cost needs to be laid at the foot of the people who created the problem,” Veness said.
Melanie Veness, vice-chair of the Association of South African Chambers
“If you just look at the whole debacle around Medupi and Kusile, they were supposed to be completed in 2015 and 2018.”
She explained that it is now 2022, and while we have Medupi supplying power to the grid, Kusile only has three of its six units online, with the last one only expected to come online in 2024.
“Those two were supposed to add 20% generation capacity to our grid which would have meant if they had been delivered on time, that we wouldn’t have had any shortages of power since 2015,” she added.
Energy expert Chris Yelland said that the decisions that caused the problems at Medupi and Kusile happened a long time ago, and the responsible people are long gone.
“Ultimately, it is either going to be the customer who pays [for Eskom’s shortcomings] via the tariff, or it’s the shareholder who is going to pay via a bailout — and the shareholder gets its money from the taxpayer.”
Veness said that Eskom should not punish its customers with price hikes because of its and the government’s failures.
“There is a lot that can be done at Eskom to mitigate the necessity to drive tariffs up, and it isn’t all just Eskom’s problem,” she said.
She added that many of their issues are caused by decision making in other departments. As a result, Eskom has to pad their application to include these inefficiencies.
“The private sector simply cannot be expected to fund these kinds of inefficiencies and the corruption in the system. It’s bad for our whole economy. It’s bad for South Africa,” Veness stated.
“We cannot keep passing this onto the private sector because we are shooting ourselves in the foot when we do it.”
“We [ASAC] believe that their application for tariffs should be limited to the costs incurred in providing that service, plus a small margin which is what’s allowed in terms of the legislation,” she added.
She also explained that they would have to do a cost of supply study to prove what they were incurring to provide that service.
Yelland explained that nothing would be resolved unless the government addresses the real issue at hand — the system’s efficiency.
“We need to look not just at Eskom, not just at municipalities, but at the electricity supply industry as a whole, which includes the electricity distribution industry as well as the private sector,” he said.
“Eskom seems to think that all its problems can be solved by lifting its price. That’s not the solution because the economy cannot afford it.”