Power price hikes a tough sell


Revelations contained in a Dentons law firm report, which showed that Eskom abused public funds to line the pockets of a few executives, will lead to the regulator taking a tougher stance when Eskom asks for increases, energy analysts say.

Following extended periods of load-shedding in 2008, Eskom applied to the energy regulator, Nersa, and was granted increases which were above inflation based on the power utility’s assertions that failing to do so would result in continued blackouts.

Nersa granted Eskom an average price increase of 27.5% for the 2008/09 year .

On June 25 2009 Nersa again approved an average tariff increase of 31.3% for Eskom.

In February 2010, it again approved an annual average price increase of 24.8% .

This dropped to 16% for 2012/13.

Finally, in 2013, the regulator allowed Eskom to raise tariffs by an average of 8% a year for the next five years.

Energy analyst Chris Yelland said the report showed Eskom’s inefficiencies, poor management and irregularities and would make it harder for Eskom to ask for bigger increases from Nersa.

“For consumers, there is no recourse at this stage. [But] these reports have sensitised the public to be more concerned and to make its voice heard,” Yelland said.

Liz McDaid, from the Southern African Faith Communities’ Environment Institute, said: “From 2008 there has been a need for an increase in electricity prices.

“We were given the same song. We were told if we don’t pay there will be no electricity.”

She warned that Eskom was holding the country to ransom.

McDaid said because of the higher than usual tariff increases, some firms could not absorb the cost and were forced to lay off workers.

“Somebody must be held accountable,” she said.

The Organisation Undoing Tax Abuse said last week Eskom’s leadership could not continue to pass its poor productivity, maladministration, expensive contracts and billions lost to corruption onto the public through tariff hikes.

“The under-recovery of poorly planned and overzealous revenue targets should not become the consumers’ problem,” Outa’s portfolio director on energy matters, Ted Blom, said.

Nersa spokesman Charles Hlebela said it had not seen the Dentons report and could not comment on whether it intended to investigate the matter.

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