Gauteng NGO Briefing – Eskom Electricity Pricing

SANGONet 14 November 2012.

SANGONeT invites NGOs and other civil society groups in Gauteng to a briefing session with Eskom on Monday, 26 November 2012, in Johannesburg.

Eskom submitted its third revenue and tariff structure application for the next Multi-Year Price Determination (MYPD 3) to the National Energy Regulator of South Africa (Nersa) on 18 October 2012. The current three-year MYPD 2 comes to an end in March 2013. Eskom is proposing a five-year determination for MYPD 3, running from 1 April 2013 to 31 March 2018, with electricity tariffs to increase by 16% per annum during this period. The increase represents a total price increase from the current 61 cents per kilowatt hour in 2012/13 to 128 cents per kilowatt hour in 2017/18. Eskom states that it needs the tariff increases to recover the cost of producing electricity, finance its expansion programmes and service its debt.

Many stakeholders across the business and civil society spectrum have already stated their concerns about the proposed tariff increases.  From a civil society perspective, organisations such as Greenpeace, groundWork, Earthlife Africa and others are at the forefront of questioning the merits of the Eskom application and the implications for all South Africans should it be approved.

South Africa needs a reliable and stable energy supply to grow the economy and respond to its vast development challenges. At the same time, most South Africans are already feeling the strain of the ever-increasing cost of living.

The challenge is how to meet South Africa’s energy requirements in the best interest of all South Africans – “we need to keep the lights on, but at what cost?”

Now that Eskom has made its submission to Nersa, an extensive public consultation process will follow until Nersa makes its determination in March 2013. Nersa will convene public hearings in all provinces from 15-31 January 2013.

The event on 26 November 2012 (10h00 – 13h00) will provide Eskom the opportunity to present a detailed overview of its application, and NGOs the opportunity to develop a thorough understanding of the application and the Nersa process to follow. It will also be an opportunity for NGOs to directly engage Eskom management, highlight issues for clarification and raise concerns about the potential implications of the proposed tariff increases.

Amongst other things, Eskom highlighted the following information in its MYPD3 presentation:

  • Residential customers using over 3000kWh will face a 35% increase – projected over 5 years the compound increase will be 348%;
  • Industrial and commercial customers face increases at least 21% – over 5  years the compound increase will be 159%;
  • Municipalities face a 13% increase and, based on past experience, will substantially increase the margin which they charge customers;
  • The increases of 16% include 3% to be used to subsidise the buying of electricity from independent power producers (described as IPPs).

However, some of the key issues not covered include:

  • What would consumer prices for electricity be if SA had competing private electricity suppliers?
  • How much could the financing burden on government be lifted if all new supply was provided by IPPs?
  • How much would SA’s GDP increase if we had an adequate electricity supply?
  • What will be the impact of the increase on job creation, the competitiveness of the manufacturing and mining sectors, inflation, the poor, etc.?

If you are not in a position to attend the event, please forward any questions or issues for clarification to be raised at the event to – info@sangonet.org.za.

RSVP by Friday, 23 November 2012:

Advertisements