Joburg and Cape Town rally against Eskom price increase

[WollieVerstege]

While I am dead against these increases, what is the alternative for Eskom to bring down it's debt?

I mean in reality, Eskom needs money to solve its debt issues and basically keep the lights on, we all know this.

Yes their lack of money comes from mismanagement and state capture, but they no longer have the money that was stolen and we all know they not going to get back the billions lost. Claiming back from municipalities who have no money isn't working.

Eskom is actually starting to show a turn around with new management, so in all seriousness where else can Eskom get this additional money they need without incurring more debt? Asking for a friend...

Eskom prices are already past the peak of the Laffer curve, any increase now will only push more paying customers partially or completely off the grid. So increasing prices will actually hurt them more than anything. The view that simply increasing prices indefinitely will solve their problems is in no way linked to reality.

The actual solution would be to drop prices and increase demand through fiscal stimulus but the idiots in charge don't have a clue.

With this increase it is actually becoming viable for me to run diesel generators 8 hours a day rather than using Eskom power. I am also invested in a solar installer and we have never been as busy as we are now.

 

[Murmaider]

Same kuk , different year. Like etolls, this kukka keeps on streaming. There must be another power provider.

I like this idea, we definitely need more power providers in this country.

I've often wondered why Eskom direct funds towards putting solar + battery solution for all residential households.
They would have the once off capex cost and lets say you got an area with 1000 houses, you would have them all feeding back into the grid. So even if one or 10 house holds in the area have an issue with their solar, they can still feel from the excess produced by the other houses.

Distributed power grid with no single points of failure, done on a mass scale would mean that each house sustains itself and also feeds a grid for those houses who either cant have solar or their solar system is faulty.

They could increase my tariff by 200% if it meant they putting my house on solar.

 

[Murmaider]

Eskom prices are already past the peak of the Laffer curve, any increase now will only push more paying customers partially or completely off the grid. So increasing prices will actually hurt them more than anything. The view that simply increasing prices indefinitely will solve their problems is in no way linked to reality.

The actual solution would be to drop prices and increase demand through fiscal stimulus but the idiots in charge don't have a clue.

With this increase it is actually becoming viable for me to run diesel generators 8 hours a day rather than using Eskom power. I am also invested in a solar installer and we have never been as busy as we are now.

Do you not think it's the carrot and the stick approach?
Raise prices, people move to solar, demand on them drops, they can shutdown old and costly power stations?

However doing it this way, Eskom doesn't have the bare the cost of the putting solar on your house, you do, so they win there. Plus they win on the connection and network fee they still bill you, even though you now dont use it, or hardly.

 

[ToxicBunny]

Do you not think it's the carrot and the stick approach?
Raise prices, people move to solar, demand on them drops, they can shutdown old and costly power stations?

However doing it this way, Eskom doesn't have the bare the cost of the putting solar on your house, you do, so they win there. Plus they win on the connection and network fee they still bill you, even though you now dont use it, or hardly.

I think you are being overly simplistic about this, saying Eskom needs the money so we must suck it up and deal with it (in essence).

Yes, those that can will move across to Solar, those that can't will HAVE to use less power just to make ends meet.

The problem lies in the fact that there is no traction on sorting out the municipal and government debt... it continues to sit there and fester, and that does not engender a culture of payment in the rest of the population. Those municipalities need to be cut off and left that way until they pay their bills... If the courts aren't happy with that solution, then the municipality must hand over their entire electricity infrastructure to Eskom and then the municipality can be on the hook for previous debt but it wouldn't impact the actual customer who would now pay Eskom directly, rather than the inefficient and corrupt municipality.


At the end of the day, Eskom needs to show progress on the debt problem from muni's and such as well as getting price increases.

 

[mypetcow]

Increasing prices will most likely have multiple side effects. Those who can afford it will get solar + lithium sorage, those who can't will do what they can and buy more energy efficient appliances or insulate their house. It will cost them money to do this obviously but it will be less than the solar + storage and less than the ongoing high cost otherwise. Obviously this will mean less revenue for Eskom overall so it won't help their cashflow in the medium term.

What viable alternative does Eskom really have instead of increasing tarrifs? None really. As I see it they need money for the turnaround and their bank balance is running low. They need money to buy coal, diesel, pay for maintenance, pay salaries, etc.
Debt collection costs money too. They are also doing this actively but the can't drop everything to collct debt and only then start up again.

So it boils down to either a 20% increase, a government loan (i.e. tax funded loan) or they issue a bond on either the local or the international market. The bond will require a high interest rate becasue of the rating of Eskom and SA....so....Eskom and we all are between a rock and a hard place. If Eskom doesn't get the 20% increase then they will get a government loan...elecrticity supply to a country, in this case Eskom, is too big to fail.

You can try to shield yourself as much as possible at home but insulation, closing the gaps between your windows and frames or buying new appliances will only go so far. Everyting from Checkers to Pick n Pay to Woolworths will face the 20% increase so inevitably our cost of living will increase substantially especially when it comes to electricity intensive products (refrigirated and frozen foods). I mean you can use it as an opportunity to lose weight I guess but that strategy is not for everyone.

I think we will all need to get more concious of our electricity usage whether we want to or not, taking a look at what the British and Europeans are doing with their double glazing, their energy labels on appliances and insulation.

 

[mpdjhb]

While I am dead against these increases, what is the alternative for Eskom to bring down it's debt?

Improve efficiencies - like any other business in their position.

 

[WollieVerstege]

Do you not think it's the carrot and the stick approach?
Raise prices, people move to solar, demand on them drops, they can shutdown old and costly power stations?

However doing it this way, Eskom doesn't have the bare the cost of the putting solar on your house, you do, so they win there. Plus they win on the connection and network fee they still bill you, even though you now dont use it, or hardly.

Well if that is Eskom's strategy then a lot of things are starting to make sense at it is the dumbest thing I have ever heard.

Me going off grid costs me nothing anymore. In 3 years my system will be fully paid for based on my usage and the current proposed increases. Based on the warranties of the components I will have at least 4 years of basically free electricity before I need to start worrying.

I am currently helping a friend go off grid. Normal 3 bedroom suburban house. He was complaining about how expensive it is to go off grid. When I showed him the numbers, he realised that he will be about R40k better off over a 10 year period going off grid at minimum.

The connection fee is only payable if you are actually connected to the grid. Here in Cape Town I am not connected to the grid and am not paying any connection fee.

 

[Budza]

Eskom will get their money. "Too big to fail"

Question for those who actually pay, is what's the best way for them to get it?

20% increase vs bailout. Those that pay for power usually pay taxes: Either way, they're paying...

20% increase you can dodge to an extent with Solar+Storage. Increases in tax to fund bailout aren't as easily avoided...

SO, of these two options, which is least kak?

 

[porchrat]

While I am dead against these increases, what is the alternative for Eskom to bring down it's debt?

I mean in reality, Eskom needs money to solve its debt issues and basically keep the lights on, we all know this.

Yes their lack of money comes from mismanagement and state capture, but they no longer have the money that was stolen and we all know they not going to get back the billions lost. Claiming back from municipalities who have no money isn't working.

Eskom is actually starting to show a turn around with new management, so in all seriousness where else can Eskom get this additional money they need without incurring more debt? Asking for a friend...

If Eskom were showing signs of real change, like sacking portions of its bloated workforce and cutting off defaulting municipalities, I'd be more inclined to be understanding.

They seem to be doing very very little to reduce their operating costs other than leaning on customers.

They cannot continue to increase costs like this. Eventually people will either be unable to afford it (in which case they either steal it, or just get disconnected/use less) or people who can afford to will go off grid.

The higher the costs rises the closer more and more people get to breaking even on that loan repayment to cover the capital cost of going solar. Eskom is destroying itself with these actions.

 

[friedpiggy]

Everyone is missing one little point. The reason Eskom has a monopoly on electricity supply and distribution is among others that "Only the state cares enough to service non profitable areas thereby ensuring that all citizens have access to electricity" or some rubbish like that.

Approach the ConCourt and the Competition Commission with the argument that due to severe state mismanagement, Eskom is no longer able to meet this part of its mandate and that therefore their monopoly should be ended.

 

[Saba'a]

True, however there is a money cost associated with debt collecting from people who don't pay.
Who covers that cost of trying to get the money out of people who owe them money (legal fees, staff salaries, etc)?

I guess I'm more saying that Eskom is in a deep hole and needs money to get out of it.
Asking for more loans means more debt.
Collecting money from those who owe money, costs money and takes a lot of time and I don't think is proving to be very successful (I stand to be corrected here).

I hate this increase, but no one seems to be giving a viable alternative of how eskom can raise the money they need quickly to get them out this hole, without incurring more debt or having to spend more money. What alternative is there to the tax payer in this regard?

How about they reduce their wage bill? Unless I'm mistaken, they have or had one of the highest norms for salaries paid.

How about efficiencies? Lots of electricity being sold. Recovering debt? How about not over paying for procured goods?

Once you manage your finances efficiently eg Soweto debt, then you ask users to sponsor your lack of efficiency. Otherwise you simply continue to sponsor and fund inefficiencies which will simply be a blackhole draining increases, np matter how many. Easy come, easy go.

 

[Saba'a]

Because it's like trying to get money out of someone who is liquidated.
If they dont have the money, they dont have the money, the municipalities can't just make the money they owe appear to eskom.

Local Government:

Build fewer stadiums? Recover debts? Stop unnecessary body guards for officials, stop inefficient procurement.

If you keep bailing me out, why would I reduce my expenses? Easy comes, easy goes.

 

[Saba'a]

The municipalities need money in order to get money out of the customers who aren't paying the municipalities, however the municipalities are bankrupt for all intents and purposes, liquidating them is going to do what exactly?

Eskom can't go after every single individual that isn't paying their account to the municipalities, that would be less successful than trying to take everyone who isn't paying etolls to court. What would to cost of this exercise be to Eskom to try and recover this money?

I'm also pretty sure they doing this anyway, how successful do you believe this has been in recovering money?

If they outsourced the debt and got even a %, it would help. More importantly it would set the precedent of user pays. A mindset of not paying and expecting services for free is not going to help, no matter how high the increases.

It simply leads to more non-payers and reduces chances of bad debtors ever wanting to pay.

Some Root causes:
1. Generation costs too high
2. Revenue not being recovered
3. In other words debt not being recovered
4. Eskom running costs too high.

 

[Saba'a]

And how is that currently working out?
The money is gone, they are never going to get it back and it would be silly to believe Eskom could.

The FBI cant even get their hands on the Guptas and we can't even get them back here with a signed extradition treaty. Now do you really think Eskom is ever going to be able to get their money back from laundered bank accounts around the world, when they can't even get money out of a guy in south africa who isn't paying his electricity bill? Highly unlikely.

It's easy to say they must recover the stolen billions, but that's exactly what it is, it's stolen, gone, not there anymore, they won't ever see that money again or be able to recover it, this is not a realistic or viable option.

Former CEO millions gone? No they simply not making a serious effort

Former Eskom CEO Brian Molefe has still not paid back the money

 

[Saba'a]

Are you completely mad? You clearly state that there is no alternative but to just increase like they want. No wonder SA is so broken when people think that instead of fixing problems we should just pay more indefinitely. HERE IS THE ALTERNATIVE: ESKOM GO FIX THEIR **** AND STOP INCREASING PRICES BECAUSE THEY DON`T FIX THEIR ****! If they get the increase they will just continue on the path that got us into this mess.

Exactly! Increases not going to solve the problem.

 

[Saba'a]

Everyone is missing one little point. The reason Eskom has a monopoly on electricity supply and distribution is among others that "Only the state cares enough to service non profitable areas thereby ensuring that all citizens have access to electricity" or some rubbish like that.

Approach the ConCourt and the Competition Commission with the argument that due to severe state mismanagement, Eskom is no longer able to meet this part of its mandate and that therefore their monopoly should be ended.

Split Eskom up.

They generate the electricity and other private companies interact with the end users? But obligate the companies to subsidise certain users/areas?

 

[ToxicBunny]

Split Eskom up.

They generate the electricity and other private companies interact with the end users? But obligate the companies to subsidise certain users/areas?

Forcing a private company to subsidise poorer areas, or provide service in poorer areas with a rebate (or some other mechanism) never works... Look at the US and their broadband rollout in rural and poorer urban areas, its a bloody mess.

 

[itareanlnotani]

Well if that is Eskom's strategy then a lot of things are starting to make sense at it is the dumbest thing I have ever heard.

Me going off grid costs me nothing anymore. In 3 years my system will be fully paid for based on my usage and the current proposed increases. Based on the warranties of the components I will have at least 4 years of basically free electricity before I need to start worrying.

I am currently helping a friend go off grid. Normal 3 bedroom suburban house. He was complaining about how expensive it is to go off grid. When I showed him the numbers, he realised that he will be about R40k better off over a 10 year period going off grid at minimum.

The connection fee is only payable if you are actually connected to the grid. Here in Cape Town I am not connected to the grid and am not paying any connection fee.

I'm also in that situation. Offgrid, and no connection, so no fee's.

They're trying to change that to get rid of that loophole, and force people into signing up for a service they don't want.