Eskom can’t expect South Africans to cough up for ‘insane’ tariff increase

Eskom’s proposed 32% electricity tariff increase is not only “insane”, but also unachievable for millions of cash-strapped South Africans.

This according to the Western Cape government, which formally opposed the “exorbitant” tariff increase in a statement on Monday.

Unaffordable

“South Africans across the board simply cannot absorb such a drastic increase, and it should not be granted to Eskom.

“The Western Cape Government (WCG) is cognisant that Eskom is cash-strapped and needs to become financially viable, but this cannot happen at the expense of residents.”

The Western Cape government has implored the National Energy Regulator of South Africa (Nersa) to consider granting an increase that is not above the current inflation rate.

“Years of national government mismanagement and corruption have driven a huge increase in the general cost of living in our country, which has been further exacerbated by the job-killing energy crisis.

“South African residents and businesses are now being dealt hammer blows on all fronts – in service provision, in declining infrastructure, in a stymied job market, all of which are making life impossible to afford for many residents, and are bringing the poorest of the poor to their knees.”

ALSO READ: Eskom: ‘We are trying to avoid a total system collapse’

Nersa cannot help much

 Nersa, however, may not be able to deviate much from Eskom’s proposed increases, Moneyweb reported earlier this month, with public hearings taking place from 17 September.

For 2022, Eskom applied for a 20% increase, which Nersa approved only at 9.61%. A large part of the reason for this decision was the deduction of almost R26 billion from Eskom’s R68 billion allowance for depreciation.

This amount was based on the R1.2 trillion it applied for on the valuation of its regulatory asset base, which Nersa rejected and adjusted the value at R550 billion.

Eskom took this part of Nersa’s decision to court, and a deadline passed without Nersa filing a notice to oppose the matter.

This means Nersa has little scope for making large adjustments this time around, unlike previous years.

ALSO READ: Nersa has very little room to limit Eskom’s proposed 32% tariff hike

Renewable energy

The Western Cape government emphasised the importance to allow more independent power producers to be brought online.

“This needs to be achieved with speed, and the national government needs to cut the unnecessary red tape that is hindering this process.”

Three project agreements were signed by Department of Mineral Resources and Energy (DMRE) Minister Gwede Mantashe.

Bid Window 5 of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) is part of a last-minute bolstering of renewable energy to an ailing national power grid, in an effort by government to quell South Africa plummeting into a load shedding wormhole.

The three successful projects due to be launched are Coleskop Wind Power, San Kraal Wind Power and Phezukomoya Wind Power.

A report released by Meridian Economics in June found that had the REIPPPP not stalled in 2016, wind and solar power would have added 5 gigawatts to the national grid, eliminating load shedding in 2021 by 96.5%.

The amount of diesel burnt in open cycle gas turbine peakers would have also been reduced by more than 70%. Eskom would have recorded a net annual saving of R2.5 billion as a result.

NOW READ: SA is not an island – load shedding happens everywhere, says Mantashe