Eskom tariff hikes opposed

MARCH 23, 2015

The Congress of South African Trade Unions (COSATU) says it will oppose Eskom’s electricity tariff increases.

COSATU spokesman, Patrick Craven, said at the weekend the increase was unjustified, "particularly because it comes in the context of an increase in the fuel levy and taxes".

He said Eskom "spends millions of rands on business breakfasts and bonuses … these increases are just an attempt to shift the burden to consumers for a crisis for which the board and management must take responsibility".

On Friday, Eskom confirmed that the price increase to be implemented on 1 April 2015 to Eskom direct customers is still 12.69% and for municipalities will be 14.25% from 1 July 2015 as approved by the National Energy Regulator of South Africa (Nersa) during November 2014.

“Eskom’s current financial position, as a result of historical non-cost reflective tariffs and the lag in recovery of eligible expenditure, does not afford Eskom’s balance sheet the ability to pre-fund further costs that are necessitated by a constrained power system such as short term power purchases from independent power producers and municipal generators and the increased use of open cycle gas turbines,” the power utility said in a statement.

“These constraints have necessitated Eskom to explore options for further review of tariff increases for the 2015/16 financial year. Submissions in terms of the Multi-Year Price Determination (MYPD) methodology have been made to Nersa in this regard.

Eskom has initiated a selective reopener of the MYPD 3 application from the 2015/16 financial year onwards that proposes an adjustment in the tariffs.

“This is due to costs incurred securing further short term power purchases and increased use of open cycle gas turbines. In terms of the Municipal Finance Management Act (MFMA), Eskom is required to first consult with the National Treasury and the South African Local Government Association (SALGA) prior to submitting to Nersa for consideration.”

The power utility will consider these comments before submitting to Nersa.

“Nersa will then follow their normal governance processes before making a decision.

“Further, the announcement by the Minister of Finance in the Budget Speech of the proposed increase in the environmental levy is yet to be promulgated,” Eskom said.

“This will have an impact on the required tariff and as such Eskom will need an adjustment in terms of the tariffs due to the levy.”

SALGA spokeswoman Karen Reyneke said a request for comment on the proposed tariff hike had been sent to all member municipalities, the Department of Co-operative Governance and Traditional Affairs and the Association of Municipal Electricity Undertakings.

"Salga strives to ensure that municipalities … are protected against any negative impacts that might arise due unfavourable tariff increases," she told Business Day.

Meanwhile a Facebook protest campaign called Eskom Rate Hike Protest 2015 has been started and has attracted over 5200 followers by Monday morning.

The campaign states that; “All South Africans need to take a stand against the proposed 22% rate hike.”