Chamber challenges NERSA

IT is almost a year ago since Dumile Cele, CEO of the Durban Chamber of Commerce and Industry (DCCI) called an “Energy Crisis” meeting on Friday 13 February 2015.

The DCCI CEO recognised the disruptive effects of load shedding on the Durban economy, lost productivity, disgruntled staff and customers, and failed deliveries, which are just some of the costs incurred by the private sector.

During the “Energy Crisis” meeting Cele appealed to business to provide feedback as to the extent to which load shedding had impacted business, in terms of lost man hours, productivity and concerns about proactively managing labour relations during this tense time and develop solutions. This meeting was followed up with electricity stakeholder engagement sessions rolled out through the DCCI area forums. The theme was: Finding the middle ground: Load Shedding vs Business Interests.

Currently, the National Energy Regulator of South Africa (NERSA) is hosting public hearings between 18 January and 5 February on Eskom’s application to claw back R22.8-billion through a tariff increase in electricity.

The Durban hearings were held on 21 and 22 January at the Durban ICC. “The Chamber feels the need to make this submission as in recent years Eskom has departed from its long term price path leading to great uncertainty about what the target electricity price should be for businesses. Subsequent changes in goals from 2008 are well reflected in the increases that have been sought since that period. Agriculture, mining, manufacturing are energy intensive and the continuous shocks to pricing emanating from Eskom are now a large internal contributing factor to the country’s economic slowdown,” said Cele.

Business is now being asked to account and pay for the inefficiencies in Eskom’s planning processes which will have a huge impact on production costs.

“The Durban Chamber requests a full accounting of the actual costs incurred by Eskom in relation to the Revenue Variance, and an indication of the extent to which these costs could have been avoided if the actual demand had been forecasted correctly,” she said.

She said the Eskom Revenue Variance Model needed to price in customer’s use of alternative sources on a much larger scale as load shedding is now accounted for in customer planning of electricity use. Heavy industry increased use of co-generation, light industry purchases of generators, households switching to solar geysers and gas stoves for example.

“The Chamber calls for the remodelling of such losses due to load shedding as well as a mechanism that does not result in such losses becoming a recovery item under RCA applications. Industry bears the cost of load shedding not just through lost revenues, but though equipment failures and recapitalisation costs. An added tariff increase as proposed by Eskom is yet another nail in the coffin for an ailing economy facing an unfavourable exchange rate, increased inflation through an exchange rate pass-through as well as food price inflation due to current water shortages,” said Cele.

The Durban Chamber of Commerce and Industry is also coordinating a submission which the public can give input to by emailing Justice Matarutse, matarutsej@durbanchamber.co.za, with the subject of the email beginning “NERSA hearings”.