News: NERSA hearings in Potch Reply

The National Energy Regulator of South Africa (NERSA) held a public hearing on Eskom’s proposed 16% tariff increase in Potchefstroom on 23 January 2013 and the School of Economics of North-West University were also represented there. The chairman managed the proceedings with strict discipline, and only the six NERSA panel members were allowed to ask questions. Security was tight and a handful of COSATU members were singing in the street the whole time, providing some background music.

At the hearings

The panel members

Eskom started the proceedings with a presentation on their cost needs and how tariffs, loans, and equities are used to finance their operations. It was noted that their focus is on the wellbeing of small businesses and the poor, and that restructuring of their operations has made Eskom more efficient, saving billions of rand. The proposed increase is for a five year period, but they argue that it will lower the monthly payments of consumers. Over the period they will have to pay R140 366 Billion in interest, but at the end be able to pay a net return of R46 497 billion to investors. It was argued that the proposed tariff increase is in line with Eskom’s expenses to provide in the demand for electricity.

COSATU’s spokesman first complained that the hearings are too early in the year, as most of their members are still on holiday. He said that the proposed increase is 110% which is outrageous, and also requested that the free basic electricity allowance should be raised from 50 to 200 kWh. They don’t reject the user pay principle, but do not want the poor to be marginalised. Quality public services are the right of the poor.

Cosatu at the NERSA hearings

Cosatu at the NERSA hearings

The spokesman of NUMSA said, when setting tariffs sustainability, the social impact and economic growth should be considered. The higher electricity tariffs will lead to job losses, higher expenses for households, and indirect cost increases, such as the price of food. COSATU’s head of research answer most of the panel’s questions addressed to COSATU as well as NUMSA. He indicated that Escom is still inefficient and wasting money, for example on the use and storage of coal. COSATU is against the proposed tariff increases, and might make the country ungovernable, if it has to.

– Prof. Ewert Kleynhans

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