SA pays high price for Eskom chaos

Understanding the complex and arcane methodology used by the National Energy Regulator of South Africa (Nersa) to evaluate electricity tariff increases is beyond the mental capacity of most South Africans.

What is not, though, is that our national power utility, Eskom, wants to gouge us even more with a proposed 20% increase in the price of electricity.

Fortunately, Nersa has rejected the application from Eskom – but based only effectively on a technicality… because the regulator claims the methodology used to evaluate pricing bids has “lapsed”.

The two are engaged in a complex court battle, with Eskom claiming that Nersa’s new way for assessing tariff increases will result in consumers paying more.

Quite who is telling the truth is almost impossible for non-experts to decipher. But what is clear is that the increases for the next few years are going to be well above the rate of inflation.

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This, in turn, will result not only in direct financial hardship to electricity consumers (those who actually pay, that is) and indirectly, to all consumers as businesses pass along their increased power bills to those who buy their products.

Economist Mike Schussler says that, even though we currently complain about our high power prices, South Africa is ranked as the 57th most expensive out of about 140 countries.

Were the 20% increase granted to Eskom, we would be close to the top 30. But, more importantly, we would be the 11th most expensive developing country … which, he says, is “quite steep” for a country which produces its own coal.

South Africans are paying the price now for the mismanagement and looting at Eskom over decades.

And, because high-priced electricity will slow down our development markedly, it is clear that our children and grandchildren will continue to pay for that economic terrorism which brought Eskom to its knees.