Ricochet News

Mandela Bay Business Chamber to oppose another Eskom tariff increase

Jan 20, 2016
Mandela Bay Business Chamber to oppose another Eskom tariff increase

Representatives from the Nelson Mandela Bay Business Chamber are expected on Wednesday to present local business concerns regarding additional electricity increases at a National Energy Regulator (NERSA) public hearing in Struandale, Port Elizabeth.

Nersa began public hearings on Monday in Cape Town as part of Eskom’s Regulatory Clearing Account (RCA) application for the third year multi-year price determination (MYPD3) to recover an additional R22.8 billion through an electricity tariff increase.

In June last year, Eskom's application for an additional 9.58% price hike was rejected by Nersa following a resounding no vote from the public and business. The increase, had it gone through, would have brought the total increase in 2015 to over 22% after prices also rose in April 2015.

Eskom is facing a funding gap to 2018 of up to R200 billion.

"As a leading business chamber in the country, the Nelson Mandela Bay Business Chamber strongly rejects additional increases in electricity tariffs for 2016," the Nelson Mandela Bay Business Chamber said in a statement.

"Lobbying on behalf of our members on issues that affect their sustainability, we simply cannot accept the raising of tariffs by nearly 17% by April this year, instead of the 8% already agreed upon."

The Chamber said that citizens and businesses in Nelson Mandela Bay cannot afford increases beyond the original MYPD3 and, once granted, this application would not be in the interest of an enabling environment for business to be globally competitive – particularly in the current economic climate we find ourselves.

"Business simply cannot absorb the effects of this RCA application, which we believe is to recover inefficiencies in maintenance and planning by Eskom.

"Against the background of a crippling drought, national political instability and the depreciation of the Rand, we propose that tariffs must, in fact, be contained and minimised to accommodate businesses, who find themselves under immense strain, to counter the economic downturn by stimulating growth and employment in the country," reads the statement.

"Electricity tariffs have increased almost five fold since 2001 and as a result business has had to reduce its usage of power and invest in alternative energy as prices continue to escalate. This could inevitably lead to further reduction of investment and employment in the country.

"The Nelson Mandela Bay Business Chamber will continue to be at the forefront of protecting businesses’ interest in relation to uncompetitive electricity tariffs, as we did last year by lobbying in various public meetings and behind the scenes for the future sustainability of the city’s economy."

Meanwhile, Eskom hit back in a statement on Tuesday, saying some presentations before Nersa contained gross misconceptions and mostly referred to the detrimental impact of load shedding on the economy.

It said the claim by Peimer that Eskom’s RCA submission is full of errors is unfounded and cannot be left unchallenged, while Opperman mischievously exhibited mealie cobs in his bid to show how Eskom has impacted agri-business.

"We have complied with MYPD methodology rules and have also independently verified the application through auditing firm Deloittes. We therefore have comfort that there are no errors in our application.

"We (also) don’t believe that our activities could have impacted the agricultural sector to the extent that it was alleged by Mr Opperman as load shedding was implemented for only 13 hours in 2013/14 (the year to which the RCA submission relates)."

The state utility said its activities during the RCA period was exactly aimed at minimising the impact of load shedding and that it is sensitive to the impact the RCA submission has on the wider economy.

"To this end, we have optimised our capital and put in a cost-saving programme that will yield about R60bn over the five years of the MYPD3 period to ensure that we remain efficient in our operations. Additionally, we have not claimed R10.5bn of costs incurred by Eskom that are not recoverable under current RCA methodology."

Meanwhile, a representative of the One Million Climate Jobs Campaign criticised Nersa for conducting the hearings at the Cape Town Convention Centre.

Sizwe Manqele from the campaign’s provincial working group told the Nersa board that “the voices of the people are not being heard” and that "the community is disadvantaged by the hearings being hosted at the CTICC".

He called on Nersa to take the hearings to township areas like Khayelitsha in Cape Town and KwaMashu in Durban.

The regulator is expected to make its decision by 26 February 2016.

 ----additional reporting News24wire