Tariff hike of only 1% increases SA mining costs by R100 million a year

10 May 2013 | ESI Africa

It therefore really hurts that since 1st of April 2013, large power consumers across South Africa have had to fork out an average monthly 9.6% tariff increase. Although some industry insiders have warned that the tariff increase could lead to 250,000 job losses, Dick Kruger, techno-economic adviser to the South African Chamber of Mines, is more optimistic. “Although 9.6% is high, we are nonetheless thankful that it is less than the 16% that Eskom eventually applied for. This increase will definitely not go unnoticed in an industry which has seen prices doubling over the last three years. However, at this stage we do not foresee any job losses or mine closures directly as a result of the increase. We have known since August 2012 that increases were on the way and mines could figure this into their short and medium plans.”

This means that mining companies had to seriously look at their operations and make adjustments such as the introduction of variable speed drive motors that have been known to cut energy use. Says Dick Kruger, “Some mines have already looked at replacing electric motors with variable speed drive motors and replacing compressed air drills with extremely expensive electric rock drills.” Continue reading

Silence on carbon tax worries industry

Business Day Live 25 April 2013.

THE continued delay in releasing details on the carbon tax, due to be implemented in 2015, is not helping South Africa’s already put-upon resources industry, Energy Intensive Users Group head Mike Rossouw said on Wednesday.

“Our first concern is, in the event (that the discussion document) is released at the end of May, that if the implementation date is not also postponed, that will give us less time to look at it and comment,” Mr Rossouw said…



Power hikes ‘will slash growth, jobs’

Business Report 3 November 2012.

Eskom’s planned price increases of 16 percent a year for the next five years will slash economic growth and chase jobs from South Africa to India, China and Russia, MPs heard yesterday.

This was the message from Energy Intensive User Group chairman Mike Rossouw. He presented figures to Parliament’s trade and industry oversight committee, which is holding public hearings on the proposed increases, showing how in 2008 South Africa’s average electricity costs were the lowest among fellow silicon smelting countries such as Canada, the US, Brazil, France and Norway.

But by last year South Africa had the highest electricity rates for silicon smelters in the group.

South Africa’s ferrochrome production, among the most competitively-priced in 2008, was by last year by far the most expensive.

He was emphatic in saying no companies represented by the Energy Intensive User Group would survive Eskom’s proposed increases, calling for independent power producers and competition to ensure efficiencies.

Municipalities were also criticised for loading fixed charges.

In Johannesburg, the municipality adds a 702 percent charge on electricity, while the City of Tshwane adds a 692 percent charge. In Cape Town the charge is 336 percent.

The SA Municipal Workers Union has rejected the price hikes, characterising them as “daylight robbery”.

Peter Haylett, chairman of the Cape Chamber of Commerce’s industrial focus portfolio committee, said the next increases would be “a fatal blow to some” and would cost jobs.

Independent on Saturday

Big users seek clarity on tariffs

Cape Times 14 September 2012.

The Energy Intensive Users Group, which represents the major mining and industrial companies, said yesterday that it was concerned there was insufficient clarity in the press reports on the third multi-year price determination for electricity tariffs. The group said the anticipated doubledigit electricity price increases that Eskomwas applying for would see power costs for consumers and businesses rising faster than inflation in years to come. If reports about the above-inflation requests were correct, then the increases in electricity costs were too high and too fast, it added. Although cost-reflective increases were unavoidable, the group said, the public needed a more accurate and transparent breakdown of these costs. – Staff writer

http://capetimes.newspaperdirect.com/epaper/viewer.aspx (paid subscription sadly)

Big users urge hard line on Eskom costs, as utility delays tariff submission

Engineering News 31 August 2012.

South Africa’s Energy Intensive User Group (EIUG) has urged the National Energy Regulator of South Africa (Nersa) to be more rigorous in its assessment of some of the cost factors informing Eskom’s application for electricity price increases for the five-year period from April 1, 2013, through to March 31, 2018.

(Editor’s note: I hope the increased rigour will include the preferential rates given to some of the EIUG members.)

The call came as Eskom requested a month extension from Nersa to give it time “to do additional scenarios”, which government had requested be included in the application. Eskom was due to submit the application on Friday August 31…


Eskom reports maintenance progress as big users express concern

Engineering News 16 May 2012.

South Africa’s Energy Intensive User Group (EIUG) has raised concerns that, despite lower than expected electricity demand and power buy-backs, electricity utility Eskom is failing to fully deal with its maintenance backlog, which could jeopardise security of supply should demand begin to pick up…


Energy tariff hike affordable: EIUG

Business Report 9 March 2012.

The National Energy Regulator (NERSA), government, and power utility Eskom have heeded the call for affordable electricity prices, says the Energy Intensive Users’ Group (EIUG).

EIUG was responding to a NERSA decision to approve an average price increase of 16% for electricity tariffs effective from April 1 this year to March 31 next year…