Independent Online

Tuesday, May 17, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

How municipalities have responded to Eskom’s proposed 20.5% tariff increase

Eskom has filed an application with the National Energy Regulator of South Africa (Nersa) for the 20.5% tariff hike approval. Picture: Danie Van Der Lith/African News Agency (ANA)

Eskom has filed an application with the National Energy Regulator of South Africa (Nersa) for the 20.5% tariff hike approval. Picture: Danie Van Der Lith/African News Agency (ANA)

Published Jan 26, 2022

Share

ESKOM is facing mounting backlash over its proposed 20.5% tariff increase. The state-owned power utility has filed an application with the National Energy Regulator of South Africa (Nersa) for a 20.5% tariff hike approval.

Many civil society organisations, economic analysts and municipalities have vehemently rejected Eskom’s proposal.

Story continues below Advertisment

The City of Johannesburg said that on January 21 mayor Mpho Moerane accompanied, by the MMC for Environment and Infrastructure Services, Michael Sun, and the Acting CEO of City Power, Tshifularo Mashava, lodged an objection against Eskom’s request for the increase.

The mayor and her delegation argued that Nersa’s approval of Eskom’s request would only serve to exacerbate the vicious cycle of unemployment and non-payment for municipal services, which ultimately will lead to dwindling incomes, revenues and expenditures.

The City of Johannesburg told IOL: “At a time when more than 10 million South Africans are excluded from the economy because of the ever-increasing unemployment rate, the multi-party government finds it implausible that Eskom elects to impose an additional burden on residents who are barely staying afloat.

“The proposed tariff hike, which is far higher than the current inflation rate, would have a devastating impact on the residents of Johannesburg already impacted by the Covid-19 pandemic and an economy that is ailing and is said to be on a recovery path. Therefore, the proposed tariff hike would erode business confidence and disrupt the much-needed economic recovery.

“The City is of the view that Eskom has room to review and revise its proposed revenue of R293 billion down by R36 billion.”

The City of Tshwane has also rejected the proposed tariff hike. While it says it acknowledges that Eskom is having financial difficulties and is turning around its business model, the power utility cannot shift this responsibility to consumers.

Story continues below Advertisment

“The unfortunate reality is that even with these proposed excessive price hikes, Eskom services are not guaranteed as residents and businesses continue to experience regular electricity outages,” it said.

“For residents, the excessive price hikes will encourage those who have the means to explore off-grid solutions, resulting in revenue losses for the City and Eskom.

“It will also lead to a possible escalation in illegal connections as the cost of electricity would become unsustainable for residents with lower incomes who cannot afford to go off the grid. Both of these combined scenarios will lead to a massive loss of revenue,” it added.

Story continues below Advertisment

The City of Cape Town and the Nelson Mandela Bay Metropolitan Municipality have also publicly called out the power utility over the “excessively” high proposed tariff hike.

The Nelson Mandela Bay Metropolitan Municipality said: “The reality is that electricity income is not spent exclusively on electricity and is utilised to cross-subsidise other municipal functions.

“Suppose tariffs are approved without the efficiency of the costs being interrogated. In that case, there is no real incentive for municipalities to spend electricity income on infrastructure or to address theft, waste, fraud and corruption in the electricity system.”

Story continues below Advertisment

Nersa has until February 25 to respond to Eskom’s application.

IOL

Share