Eskom to revise tariff proposal

16 November 2009

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.

Original Article Link:

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