POWER CRISIS
South Africa responds to greenlighting of ‘unaffordable’ 18.65% electricity tariff increase
The approval of an eye-watering annual 18.6% price increase for Eskom customers from April 1 has sparked national fury, with many commentators pointing to the devastating effect it will have on poorer communities.
The National Energy Regulator of South Africa’s (Nersa) approval of an 18.65% tariff increase for Eskom has resulted in significant backlash from organisational bodies across South Africa. The tariff increase is for the 2023/24 financial year. It is above the current inflation rate of 7.4%.
The announcement, coupled with Stage 6 blackouts, has compounded public outrage. The increase will be effective from 1 April for standard tariff customers.
Public outcry
“South Africans have been feeling the rising cost of living for some time, and now, more South Africans will be forced to make trade-offs between their food security and energy needs,” said Nhlanhla Sibisi, Greenpeace Africa climate and energy campaigner, in a statement.
“It is unthinkable that South Africans are expected to incur a greater cost while receiving less electricity, considering we are in the longest extended period of load shedding in its history,” said Sibisi. He called for the transition to renewable energy in light of the electricity challenges South Africa has faced.
“OUTA is outraged at government’s failure to help South Africans to weather this storm,” said Liz McDaid, parliamentary and energy advisor for the Organisation Undoing Tax Abuse’s (OUTA), in a statement. The failure of government to fast-track the Independent Power Producers Procurement Programme means that excessive diesel is being consumed by Eskom because of a reliance on open-cycle gas turbines, according to McDaid.
One of the ways to combat this current energy crisis is to effectively address the corruption that adds to the breakdowns occurring at coal power stations, said McDaid. Eskom is also being pushed to improve its energy availability factor to above 65% to meet Nersa’s conditions, said the OUTA statement.
“We also need a forward-looking energy minister who sees the value of renewable energy and fast-tracks its implementation to get affordable energy onto the grid,” said McDaid.
McDaid outlined what the tariff increase would mean for a South African wallet. “If you are paying R500 a month, you are now probably going to pay R590, if you are a direct Eskom customer. However, you might also have fixed monthly costs, which would probably be on top of that. If you are a municipal customer, you are going to pay more [than the R590], because the municipality always adds onto the Eskom tariff for their part of giving you electricity,” explained McDaid.
Political backlash
The high cost of living, unemployment, an 18.65% tariff increase and Stage 6 load shedding are “all indicators of a failed state” according to the Democratic Alliance’s Kevin Mileham, Shadow Minister of Mineral Resources and Energy.
“The reality is that South Africans are fed up having to go sleep and wake up without a critical commodity, which they pay a hefty price for,” said Mileham in a statement.
“Load shedding has gotten worse under Ramaphosa’s leadership; it is time for South Africans to hold him accountable. It should be impossible so far in our democracy for people to have to choose between buying food, or electricity, which they don’t receive,” said Mileham.
“This is another blow to already hard-pressed citizens, particularly poor residents in our province who are unable to make alternative arrangements and rely on this essential service,” said Western Cape Premier Alan Winde on the tariff increase.
“Consumers are being charged more for a service that we are not getting. This hike is far above inflation and excessive. In an economy that is already vulnerable and trying to rebuild after the Covid-19 pandemic this will just contribute further to hardship for our residents,” stated Winde.
Winde said that the Western Cape’s Energy Council is looking at options to stabilise and increase alternative power generation in the province. “We need to become independent of Eskom and be energy-resilient,” he said.
Working in the dark during rolling blackouts. (Photo: Emile Hendricks / Foto24)
Other municipalities hurting too
A statement from the office of executive mayor Peter Teixeira, on behalf of the Midvaal Local Municipality, suggested that the move will further push ordinary South Africans into hard times. The municipality called the increase “unaffordable” and said that expenses incurred by the heightened tariff would drive more South Africans into poverty.
“The announcement to increase the electricity tariff by 18.65% will have a devastating effect on the residents of Midvaal Local Municipality. It is a blow to our residents who are already hard-pressed and stretched due to the high cost of living,” Teixeira told Daily Maverick.
“This increase means that our residents, particularly the poor, will have to divert money meant for basic items such as transport costs and food, just to keep the lights on,” continued Teixeira. “Many businesses in our areas are reeling as they are forced to seek alternative power supplies such as generators or risk closing for the hours affected by load shedding,” he said.
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Some businesses were forced to permanently shut down as they could not absorb the additional costs, leading to further job losses.
“It is disappointing that our residents are forced to carry the cost of Eskom’s failure and incompetence. The increase is despite Eskom’s failure to keep the lights on,” said Teixeira. “We have been inundated with comments from residents also expressing their disappointment and frustration upon hearing this announcement.”
The increased load shedding stages have an adverse effect on Midvaal Local Municipality’s electricity infrastructure and network, said the statement. The municipality is taking steps to be less reliant on Eskom.
Executive Mayor Gesie van Deventer of Stellenbosch Municipality called the tariff increases “unaffordable and unfair”. “Our residents, and in particular our small and medium businesses, simply cannot afford these continuous price increases. Like the majority of South Africans, many residents and businesses are already struggling to make ends meet,” said Van Deventer.
“Any increase should be in line with the consumer price index. An 18.6% increase is outrageous and unjust, especially given the fact that we are in the midst of the worst load shedding on record,” she said. DM
Accountability. A term foreign to the ruling political party, foreign to their deployed party hacks, equally foreign to those charged with fixing what is broken, and wholly unknown to the Minister of Mineral Resources and Energy, and the current State President.
Tragic but absolutely true… Ramaposa is great at talking the talk… But walking the talk, my goodness, his ‘walker’ rusts in the corner… Plus.. To let someone with such blatent vested interests as Gwede, greedy AND apparently??? uninformed be in that position, just speaks volumes. It’s enough now…
Part of this increase is most like due to the non-payment (to Eskom) by rogue municipalities. Those of us who can afford it will simply “get off the grid”.
This is exactly what causes the death spiral of utilities such as this. The increased tariff causes some to leave which causes another round of increases way in excess of inflation which causes the next wave of customers to leave which causes another round of increases in excess of inflation and so on. Until the cost is so high, it become commercially unviable. You just have decide which wave you are going to be in but it’s not advisable to be part of the last wave.
I’m heading 90% off. The current setup has perverse outcomes. Just before 2pm one of my solar was producing 272kW and being Sunday my loads were under 40 – I was EXPORTING over 200kW. Along comes 2pm, my solar must stop and I run a 13 liter diesel Scania to look after my factory while my assistance to the grid becomes ZERO. I would lay odds that in my valley my area was negative energy in total when they switched us off. By April I will have a BIG battery. I will export less, I won’t run the Scania unless batteries get too low and sun isn’t shining. The new BYO.
Well – handover ESKOM to Mr. Mantashe! I’m sure he’ll fix the challenges in a iffy 🙂 🙂
Consumers are paying almost exactly double for electricity since 2017 – the recent 18,65% included – yet we get a fraction of the value.
It’s like buying a loaf of bread, paying double of what it cost five years ago but only getting four slices…
Where in the hell is this money really going? ? ?
Politically connected cadres maybe?
The consumers have to face excessive price increases so that the corruptees, many of whom part of or related to government, are not losing income.
Eskom is a captured, failed state within our (failed) state, sabotaged by gangsters .
Gwede and other fossils with their pre-paleolithic methods, together with two-thirds of Eskom “staff” must be kicked out before any improvement can be made.
Then Eskom has to be divided into manageable divisions and privatized.
An example of how it can be done is Brazil, where similar issues prevailed, but where they succeeded in improving outages and revenue collection quite admirably.
Truth number 1. The 18% increase is needed to pay for the users who don’t pay. If the increased cost to Eskom is in line with CPI or 7 %, then if just 10% pay nothing then the increase will be 18% for the 90% who do pay. And we payers just accept there is a proportion of consumers who simply steal electricity and Eskom do nothing about it as long as the majority is still paying.
Truth number 2. It is probably unlawful to take money from customers who have prepaid meters and then not deliver what they have already paid for. Once I pay for something, it belongs to me.
FFS, South African government! With Stage 6 loadshedding, I have uninterrupted power because of a solar installation – yet, even though my batteries are at 100% at 10 am on the average day, you make it difficult or even MORE expensive than using mains electricity, for me toput power back into the grid.
Lighten up – literally! Incentivise “citizen power”; have municipalities do everything from pumped water storage tolarge-scale solar and wind. NOW!!
Any increase should be in line with what ESKOM NEEDS to service its debt, to fund the decoupling of the various business units inside ESKOM, to pay for diesel for the Open Cycle Gas Turbines, to build new generation capacity and to pay for renewables. Only a fool would insist that ESKOM’s tariff increase be less than or equal to the consumer price index when we are in the middle of an electricity crisis. The reason we are having large tariff hikes now is because electricity was never correctly priced in the past, we have to adjust to the REAL price of electricity which is why the increases are so large now.
The focus tends to be on the electricity supply side only and which is constrained by installed capacity and all the other reasons so well documented by your readers.
The demands side shows rapidly increasing numbers of individuals and households, desperate for electric power as they acquire electronic gadgets and all the other devices necessary to uplift and compete in a modern society. Affordability comes into play and the classic examples are essential services, such as hospitals, who have no choice but to provide backup own generation at a high cost that outstrips any other available supply. Other countries have overcome this problem with sophisticated power buying and wheeling solutions. SA is way behind in this regard.
The price of electricity in cost/ per kWh in other countries that are similar to SA, those without State owned and subsidised primary energy supply, all indicate that at present prices, supply is unsustainable. If Eskom was run as a proper corporate entity, and not a state captured piggy bank for cadres, it would not survive in its present form.
Price ( increase) is urgently necessary, but so is the need to plug all the wasted and stolen money in the electricity distribution chain, so that Eskom can become debt-manageable once more.
List Eskom or viable parts of Eskom on the JSE ASAP and then see what happens.
Little is said of the farming sector who are mostly direct Eskom customers. We pay for a ‘Service and Admin charge’ = R34.50/day,”Nnetwork capacity charge’ = R41.63/day & then ‘network demand and ancillary charges’ based on Kwh units use, plus also the cost of units used. So before one flicks a switch its ~ R 1600/month to have Eskom available. However, over the past year it has not been available much. The question needs to be asked if these ‘availability charges’ are legal & justified if the electricity is not available – perhaps AgriSA needs to look into this. Most farmers have had to get generators or go solar – or loose a crop. Increased costs will just drive more to become independent. Not forgetting the massive increase to food production. So whilst Eskom gets an 18.75% increase – its means a knock-on cost as this will drive-up many other costs – food. WHY oh WHY is Nersa or Eskom not allowing feed-in of excess solar power from the 100,000′ of people who have already installed solar? On a sunny day by mid-morning one’s batteries are fully charged. The excess could be fed back into the grid. It must also be noted that direct Eskom customers had to pay a deposit when acquiring the account. If you cancel or discontinue your Eskom supply they must pay back that deposit, plus the interest earned. Thus, can Eskom really afford to loose its paying customers? Of course not. But that is exactly what they are self inducing – ‘cost & load shedding suicide’.