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Salga slams parastatal's application  Comments
November 16, 2009

By Justin Brown


  • To read the South African Local Government Association's response to Eskom's application - click here to download full document

    The South African Local Government Association (Salga) has ripped apart Eskom's application for a 45-percent tariff increase a year over three years. Salga represents the country's municipalities, which consume 40 percent of the country's power.

    "The tariff changes contained in the proposal are based on complex matters and will have far-reaching impacts which are difficult to predict at this stage," Salga said.

    If Eskom were to get its three 45 percent increases through, then over the four years to April 2012 energy prices would increase fivefold.

    The proposed increase far exceeded any other electricity price hike in the industry's history and therefore required careful consideration, it said.

    The proposed power increases would impact on investment, trade and general economic activity, the association added.

    Salga said the international comparisons included in Eskom's application to the National Energy Regulator of SA might be misleading in that they incorrectly compared Eskom's average tariff.

    "Salga recommends that Eskom improve this section of the proposal by providing clear and reasonable comparisons of both country and utility average tariffs, as well as industrial and residential tariffs."

    Salga warned that the size of the price increases that Eskom was seeking would have a significant impact on the costs of municipal services such as water and street lighting.

    It criticised Eskom for basing its expansion on huge coal-fired power plants. "This strategy will expose South African power consumers to significant cost risks for the 50-year life of these plants since the future price of carbon emissions is unknown at this stage."

    Salga also slammed Eskom for a lack of flexibility in its expansion plan that involved large-scale projects with long lead times and no provision for flexibility in commissioning dates.
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    Showing page 1 of 1 comment pages, 4 total comments
    12 Weeks ago Anonymous wrote :
    South African's pay electricity rates way, way below the world average. I hate to say this but prices need to go up to pay for new capacity. If it doesn't come out of electricity users it will come out of other taxes.
    12 Weeks ago The Watchman. wrote :
    All the careful consideration without thorough, hands-on investigation and assessment of the reality of the economic short-fall claims, are not worth a LIGHT, - excuse the pun! Get your backsides out of those plush, comfortable chairs, and get some exercise for a change. The exercise in carrying out an effective exercise will get you all physically fit, and will possibly, if done with honest, dogged determination and enthusiasm, produce results that will make everyone very proud, and also determined to get super-fit on an ongoing basis in getting the job done!
    12 Weeks ago Bilal wrote :
    The fact that the National Energy Regulator would even consider an application for this ridiculous price hike is pathetic. It should have been thrown out immediately. Eskom should find other means of financing its expansion. It is unfortunate that in a relatively new democracy and developing economy that the consumer has to foot the bill for poor management and bad planning. Are we not paying enough tax already? Why are these executives, tasked with managing a large parastatal, being paid fat salaries/bonuses even though they are apparently incompetent? Succession planning becomes ever more important in this instance. Maybe government should consider privatising Eskom.
    12 Weeks ago Pierre Hough wrote :
    Escom's Board must consider what the effect would be on the end consumers if they were to supply electricity directly to all end consumers by cutting out local governments to whom they sell electricity in bulk, who then in turn - at a profit - distribute electricity to the end consumer.
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