South African municipalities threatened by private power

[Hanno Labuschagne]

South African municipalities threatened by private power

Poor service delivery could see South African municipalities lose revenue from electricity tariffs as more private power producers are expected to come online in the coming years.

That is according to economist Dawie Roodt, who recently spoke to the Sunday newspaper Rapport about a letter from the Nelson Mandela Bay Business Chamber to the National Energy Regulator of South Africa (Nersa).

 

[rvZA]

Municipalities do not care about private power - in the least. This is the last of their worries. They know they will start increasing other services and rates and taxes by the thousands of Rands each month if they lose income from electricity. Don't be surprised if your property tax increases from R400 or R1200 to R8000 a month. Also do not be surprised if new Solar or Private Electricity Supplier rates are added to your municipality bill in the thousands of Rands each month. Municipalities will never, ever lose this income. Dawie can sleep easy about that.

 

[neoprema]

I don't care if private power causes your municipality to become a giant crater over which they fill in the earth and shove solar panels on top.

 

[Chris.Geerdts]

Dawie correctly points out there will be a massive loss of revenue from self-generation, and this was the biggest source of muni revenue outside rates for decades now. It suited many of us to have power-hungry businesses subsidising our costs. Changes need to be fair and need to be done quickly. Wheeling is the obvious replacement that needs to be implemented rapidly. I think CoCT is still testing that and it's for 11kV supplies. That fee needs to be fair or it won't be used.

I guess the parallel issue is we've been forced to be price takers on Eskom, paying ever more for an unreliable service. The Muni's can't sell their over-priced, unreliable service if there are alternatives, and it is the big users who are moving away.

My guess is Eskom transmission will (possibly) do OK as a 'wheeling' business.

Eskom generation will shrink until reduced demand lets them maintain their fleet properly and cut the expensive OCGT and older power stations, so reducing gen costs. If their power is affordable, Munis can score again.

However I can't see Eskom being able to cut staffing costs sufficiently to stay competitive, so we'll see a re-enactment of ongoing, SAA type subsidies.

 

[Chris.Geerdts]

CoCT recent published budget shows electricity is by far the biggest revenue item - 1/3rd of total revenue and 45% higher than money from rates, the only other big source.

 

[richjdavies]

View attachment 1329224

CoCT recent published budget shows electricity is by far the biggest revenue item - 1/3rd of total revenue and 45% higher than money from rates, the only other big source.

But most of that goes straight to Eskom...

 

[Chris.Geerdts]

But most of that goes straight to Eskom...

True. Revenue of R17 572 and bulk cost of R11 182m is budgeted for this upcoming year so 'only' R6,39bn on the markup

 

[richjdavies]

True. Revenue of R17 572 and bulk cost of R11 182m is budgeted for this upcoming year so 'only' R6,39bn on the markup

They do need to run the local grid for that, but yes... It's a markup no doubt!