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Eskom to revise tariff proposal  Comments

Treasury not happy with tripling prices

November 16, 2009

By Justin Brown


Consumers will be relieved that power utility Eskom has been compelled to revise its proposed 45 percent a year increase over three years to 2012.

Eskom was due to submit the revised tariff proposal by November 30, Public Enterprises Minister Barbara Hogan said last week.

The revision comes after responses to the application from the National Treasury, the SA Local Government Association (Salga) and business organisations.

Salga and local business emphasised the unviability of the proposed increases as well as the impact on the poor.

Eskom spokesman Andrew Etzinger confirmed on Friday that the utility was reviewing its proposed tariff increases.

Brian Dames, Eskom's chief generation officer, declined to say whether the proposal to triple energy prices would change as part of the revision.

Earlier this month the cabinet agreed that Eskom's application needed further consideration, particularly the social impact of the price increases.

Department of Public Enterprises spokeswoman Ayanda Shezi said while the department supported Eskom's tariff application for more than tripling energy prices by April 2012, the application needed to take into account mechanisms to protect the poor.

Shezi said the responses from Salga and the Treasury could result in a change to Eskom's initial application.

Bloomberg last week quoted AngloGold Ashanti chief executive Mark Cutifani as saying that Eskom's proposal "will not fly". He added: "We are looking at a doubling of power costs over the next five years."


Cornelis van der Waal, a Frost & Sullivan analyst, said while Eskom needed the increase to complete its expansion plans, he did not expect it to win approval for a tripling in power tariffs. "At some point Eskom's programme is going to have to be amended. The Kusile power station will need to be partly funded by private investors," he said.

Thembani Bukula, the head of electricity regulation at the National Energy Regulator of SA (Nersa), said on Friday that he was not aware that Eskom would be revising its application but if it did submit a new application the public would get more time to comment.

Nersa spokeswoman Ryna Boshoff said the regulator had received 134 submissions regarding Eskom's application, including 119 from individuals, seven from major industrial users of energy and one from a government department.

Boshoff said that only one submission was in support of the increase and this came from a party involved in renewable energy. Higher tariffs will make more renewable energy projects viable.

Treasury spokeswoman Thoraya Pandy said: "The government and Eskom are working closely on Eskom's submission to Nersa and a further announcement will be made later this month."

Meanwhile, Sapa yesterday reported that it was unclear if the meeting between Hogan and former Eskom board chairman Bobby Godsell took place.

Shezi, Hogan's spokeswoman, said any outcome of the meeting would be communicated in due course.
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Showing page 1 of 2 comment pages, 19 total comments
12 Weeks ago Grim Reaper wrote :
In reply to dear Brother Dave, - Your comment smacks of your being a beneficiary involved in the running of Eskom. What may make sense to you does not even come across as common sense as far as proper business principles and ethics are concerned. Someone has, or some many have obviously benefited unfairly from the proceeds of Eskom until very recently, and are hoping to keep up the extravagant milking procedure; this at the further expense of our already grossly-overburdened nation. Payback time has indeed arrived, but in all fairness, let this be at the expense of the fat-cats who have been running the affairs of our nation for their own benefit, without even sparing a thought for the lives of the working people, and definitely no thought for the poor. And, by they way; if Eskom is indeed only charging 30cents per kwh for their product, then why are ordinary working class people like myself being charged 3 times the amount. The disgraceful ducking and diving and cover-ups have got to stop, - NOW. Let Eskom be the first of the parastatals to convert to straight talk and to ruthlessly straight dealing and service delivery. My response to ridiculous price hikes is a resounding - No bloody way! ! ! Let the guilty perpetrator pay the penalty for his folly, or no useful lesson will be learned! Remember, - "there is no fool like an old fool."
12 Weeks ago AnonymousThe Watchman. wrote :
Eskom seems to forget that they are simply suppliers of a commodity. It was their duty to run their affairs in marketing and receiving payment for their product with utmost care and efficiency, so that their maintenance and the upgrading of equipment to cater for increasing demand could be catered for from what should have been their well-managed profits. Just think how damn ludicrous it would be for the oil companies to impose massive price hikes for their products every time they needed to carry out maintenance or upgrading of their production plants to supply the increasing demand. Certainly no more ludicrous than what Eskom is trying to lumber the South African population with. This is not even unfair: it is totally arrogant stupidity and most definitely, absolutely unacceptable! ! ! How about a comment from Barbara Hogan in reply to this truthful comment. Surely she must have a similar opinion; or does she simply not care about the welfare of our sad embattled nation under the rule of educated, lazy under-achievers with immature, childish, selfcentered, undisciplined reasoning!
12 Weeks ago Anonymous wrote :
Welcome to Zimbabwe 2.0 South Africa. The same mistakes just better hidden. The same governmental mindset just excused better. Saying one thing then doing the exact opposite seems to be a recurring theme throughout governments in all of Africa as a continent. Is honesty, transparency in decision making and an absence of political wrangling, corruption and nepotism/cronyism too much to ask for in our government? Or do they simply not care? They conned the masses into giving that all important vote and now they have what they want they will do everything in their power to stay where they are until there is nothing left to pilage. I may be convinced to believe otherwise if our government stops making decisions based on skin color and political correctness and begins making those decisions based on logical reasoning and hard facts and evidence. Come on Jacob Zuma. It is time for you to put away your golden tongue and make good on your promises. Get foreign investment to fund power station expansions instead of financially slaughtering the working minority (that is demographic minority not racial minority just to be clear) while the majority of citizens struggle to find work that will pay enough to cover their expenses. Look at things logically Mr Jacob Zuma instead of through a rainbow tinted pair of glasses. Take the glasses off and ignore color in favor of ability Mr Zuma. Massive jumps in tarrifs will cause fewer people to be able to afford to pay for electricity Mr Zuma.
12 Weeks ago NT wrote :
As a concerned citizen, I reported the people who are currently using electricity for free by illegally tempering with the meter system. I was hoping for an immediate action but was told that I need to give them the exact adress(i.e street name and house number). I couldn't give them the house number as I was scared the owners will know it was me who reported the matter, but gave them the place and the street name as well. But guess what??? That wasn't enough for them and they said they have many investigations and won't be able to go to each one of the houses in the said street name(What a lame excuse!!) The truth of the matter is, there's more than one house that has illegal connections and those people don't even care about saving electricity because they don't pay a cent towards the power they are using. In my opinion, we wouldn't be aving power shortages if eskom did their job by continously checking on the housholds that are not purchasing electricity at all, while they are using it daily. I'm a very angry citizen and I feel that eskom has failed me and also discouraged me of reporting anything to their offices in future. I'm sure many people will share my sentiments in this regard.
12 Weeks ago Realist not Racist wrote :
Not good enough! What will the increase be? 30%? Let us all be honest and forthright abiout the situation in our country. This solution still does not get to the crux of the matter - iefficiency on the part of ANC elected CEO's who are way beyond their ceiling of incompetence. The situation will continue to deteriorate as long as we have appointments to high positions based on skin colour, political affiliation and family connections. Which meams that the same scenario will be played out each year until our country has the highest power rates in the world, the most expensive labour frorce, the most draconian labour laws and the highest level of incompetent upper level management. We are moving towards disater with our food supply with the utterly unrealistic "land grab" policy practised here in our country. (Dubbed "Land Claims" for convenience) 99% of all land claimed and given to the "ancestral occupiers" no longer produces the food we need to feed the population. Thos who do produce are finding themeselves in a more and more advantageous position regarding supply and demand hence food price increases of up to 35%. Get rid of the idiots trying to run big business corporations, the "token" board members who are paid nice fat sums for "image" reasons and BEE projects which cost the tax pater billions. Let's get real an be honest for a change.
12 Weeks ago Dave wrote :
We are all reluctantly coming to grips with the fact that the free lunch is over. Our electricity has been too cheap for too long and our leadership has failed to understand that the cost of this has to be paid by someone. The future reality is that most of our energy in all its forms comes from non-renewable fossil fuels, which are subject to diminishing returns and going to become increasingly scarce & expensive. As unpleasant as large price hikes are to all of us especially the poor and its negative effect on economic growth, the sooner we face reality and deal with it the better. Eskom's maintenance of the grid and expansion projects will ultimately have to be paid by the user of electricity in one form or another as debt capital has to be serviced by someone. To hike the price per kwh is probably the most efficient means of funding because, as with the price of fuel, it will result in behaviour change and the increasing use (and viability) of renewable energy sources which we desperately need. No matter what NERSA, Sapa or any other lobby group have to say about it, if we don't take the pain now we will have to take it later, tenfold. Anyone who doubts this should take the time to study 'peak oil' and views of the scientific community in their concerns over our future energy supply. Development is not worthwhile unless it is sustainable in the true sense of the word.
12 Weeks ago Pat wrote :
Before imposing such hefty increases, why is there no drive to improve awareness and promote use of energy efficient light bulbs, using microwaves etc. Low power TVs, e.g. LEDs. Instead you find these things are so much more expensive they are only the elite few who can afford to buy them , government should introduce incentives to increase the use of these energy savers on the general population. Even things like heat insulation for homes, which keep in heat during cold spells and keep the heat out during hot times, are wonderful alternatives to aircons, but again as i say, if you decide to go this route its actually much more expensive, than the "normal route"
12 Weeks ago Anonymous wrote :
A few years ago I read an article about a UJ proffessor who developed a solar panel that would be very effective. The Gov was going to employ this, but have not as yet. Lets all change over to solar. We definitely have the sun for it. Lower the price of solar and everyone could at least change their geysers over. This would save a lot of energy;Sadly, I am afraid however that is the money ESKOM is after and not the conservation of our planet and saving energy...
12 Weeks ago n.sotyato wrote :
as south african citizins we should learn to save electricity .the shortage of electricity is caused by us wasting electricity
12 Weeks ago Anonymous wrote :
As a South African living temporarily abroad, the future of the country concersn me greatly. As I may be out of the loop, I am asking myself, why is there no mention to alleviating the energy shortage by creating solar energy farms, as is done in most sunny countries around the world. Why can we not not develop the system as in France using photovoltaique panels and linking up energy generation to the national grid with the tariff reduction/tax deduction for the consumer. There are many solar panel companies looking for "new business"; and I am not sure why this is not a topic for our Dept of Minerals and Energy /Eskom? I am just shocked at the lack of dicussion on sustainable energy in SA.
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