Manufacturers bid for cheaper power

Business Day Live 16 November 2012.

MANUFACTURERS say they are making progress in their talks with the government about the possibility of electricity subsidies.

Following Eskom’s admission last month that BHP Billiton paid lower rates for electricity than domestic users because of a special deal, manufacturers have been clamouring for similar discounts. Eskom has applied to the National Energy Regulator of SA for tariffs to increase 16% a year over the next five years…

(Editor’s note: I really don’t think that extending electricity subsidies to businesses, in addition to the BHP Billiton subsidies that everyone complains about is the right way to go. Cheap electricity will just perpetuate market distortions and encourage inefficient use of energy. Rather have true, cost-reflective tariffs and encourage businesses in a more constructive way, such as bigger tax concessions on energy efficiency improvements, or a simple reduction in corporate tax. I’m the economists will be full of good ideas. But lets not repeat the BHP Billiton mistakes.)

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Eskom moves to secure five-year tariff visibility as it initiates MYPD3 process

Engineering News 22 June 2012.

Eskom confirmed on Friday that its third multiyear price determination (MYPD3) application to the National Energy Regulator of South Africa (Nersa) would be for a five-year period, rather than the three-year horizon that prevailed during the first two MYPD periods…

http://www.engineeringnews.co.za/article/eskom-moves-to-secure-five-year-tariff-visibility-as-it-initiates-mypd3-process-2012-06-22

Eskom might double tariffs by 2017 Analyst calls for asset sales to fund capex

Cape Times 21 June 2012.

ESKOM is targeting a tariff of 97.51c per kilowatt-hour in five years’ time. This is almost double the average price of 50.27c per kilowatt-hour that it currently charges and means that hard-pressed consumers could be facing average annual increases of around 15 percent for the next five years…

 

Zuma appeals to Eskom

Business Report 30 May 2012.

Concern for consumers will inform Eskom’s upcoming electricity tariff increase application, President Jacob Zuma suggested on Wednesday.

Delivering the presidency budget speech, Zuma pointed out that Eskom reduced its tariff hike for this year from 25.9 percent to 16 percent thanks to government’s decision to sacrifice a return of R8 billion…

http://www.iol.co.za/business/companies/zuma-appeals-to-eskom-1.1308195

Eskom calls for cost-related tariff

Business Report 22 May 2012.

Eskom called for cost-related tariff increases on Tuesday, citing Sanral’s woes as proof that the consumer-pay principle needs to apply to safeguard the credit ratings of parastatals.
Finance director Paul O’Flaherty told MPs the utility needed tariffs to reach a cost-reflective level of 90 cents per kilowatt hour in real terms by 2017 to complete its R385 billion build programme and pay its debt…

(Editorial note. The SA Energy Act said we must get to cost-reflective tariffs, but didn’t give a date. I think we need to get beyond distorting our energy economics through artificial pricing – if we let Eskom charge cost-reflective tariffs right now, suddenly energy efficiency investments would become extremely attractive. And instead of giving lower income people free basic electricity we should rather give cash grants, they would then also use electricity efficiently, this was done in Brasil and it worked well. And instead of giving the energy intensive users, such as the smelters, artificially low-cost energy, give them cash or tax rebates. Sorry, end of rant!)

http://www.iol.co.za/business/companies/eskom-calls-for-cost-related-tariff-1.1302348