SA could have world's most expensive power

19 November 2009

South Africa could have the world's most expensive electricity if Eskom gets it tariff increases, an economist said on Thursday.

"South Africa's electricity is more expensive than electricity in the US, Israel and Mexico and if Eskom gets its 45 percent increase every year for three years, SA will have the most expensive electricity in the world," Mike Schussler told a presentation on Eskom in Johannesburg entitled "Recovery or Eskom".

"We keep being told that we have the cheapest electricity in the world and this is not the case. Let's start calling Eskom's prices the most expensive in the world and change the public's mindset."

From 2005 up to the present, electricity prices had increased 91 percent, while inflation rose only 35 percent over the same period. Schussler said electricity prices were set to increase around 200 percent over the next five years.

"This means that between 2005 and 2014 electricity prices on the current proposal would have increased 633 percent."

Schussler noted however that income from residential properties and businesses for electricity went not only to Eskom.

"Eskom had a revenue of over R53,6 billion in the year to March 2009 while municipalities' gross revenue from electricity was about R32.,9 billion for the same period."

That, he said, was a total R86,5 billion or around 3,7 percent of gross domestic product.

The average municipalilty household paid around R365 per month in 2008 while Eskom customers paid an average of R124 per month.

"There are now over 12,3 million electricity accounts in South Africa. By comparison there are only 1,8 million mortgage accounts in South Africa.

"This means that the effect of an electricity price hike is felt by 6,7 times more by consumers," Schussler said.

Original Article Link:

http://www.busrep.co.za/index.php?fArticleId=5252417