Eskom pricing decision soon
Nersa confirmed that its decision would be made public on Thursday. It had fast-tracked the parastatal’s application. An electricity subcommittee meeting to consider recommendations to Nersa took place on June 17.
The parastatal’s interim application unleashed a throng of criticism from trade unions and civil society groups due to its anticipated effect on the poor.
The government seemed divided on whether the parastatal should be allowed to inflict the steep hike, with Public Enterprises Minister Barbara Hogan urging for it. Energy Minister Dipuo Peters, however, warned against putting up prices too quickly due to the effect on the poor.
In her budget speech on Tuesday, Peters argued that tariffs rising too quickly would lead to “unintended consequences”.
“It is an important matter that needs to be put into proper perspective, particularly as it relates to the latent concerns about the impact on the indigent.
“At the outset, I must state categorically that we do not agree that the tariffs must rise rapidly. It is our view that this will lead to unintended consequences, not least of which would be an adverse economic impact in the face of the recession we are currently experiencing,” Peters said.
The Congress of SA Trade Unions, which had vehemently opposed Eskom’s application, on Wednesday welcomed Peters’ remarks.
“The minister correctly points out that the tariffs must be structured to ensure that the big users subsidise the domestic users,” it said in a statement.
Peters also indicated that her department had initiated a process which would enable government to provide a cushion for the indigent, and would develop an appropriate pricing policy framework to structure the tariff regime so that the indigent were insulated from increasing tariffs.
The trade union federation said it would seek a meeting with the minister on this process.
It expressed displeasure about Hogan’s support for the increase.
“We want to remind the minister that Eskom finds itself in this untenable situation because government, and her department in particular, deliberately failed to invest in the electricity sector because it wanted to privatise Eskom,” it said.
Hogan had cautioned that if the parastatal’s interim application was not approved, the country would face higher increases later on, Business Day reported.
During public hearings on Eskom’s application earlier this month, chief executive Jacob Maroga said the country’s electricity supply would be at risk if Eskom did not receive its 34 percent tariff hike.
There was a large shortfall in its finances after taking into account government funding and loans, hence the parastatal’s interim application for a 34% price hike to come from the consumer’s pocket.
Eskom applied for the increase for the current financial year.
It intended applying for another price rise later in the year to cover the balance of its three-year pricing model.
The hike would be an “interim” move pending finalisation of Eskom’s funding model, likely to be thrashed out by the end of September.
During Nersa’s recent hearings, the parastatal was widely criticised for missing the legislated deadline for a price hike application and for failing to provide sufficient information to substantiate the need for the tariff hike.
Eskom pricing – do you think it should be approved?
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