Strike looms over power hike

Johannesburg - The Congress of South African Trade Unions (Cosatu) on Monday said it was "gravely concerned" about reports that South African power utility Eskom is likely to apply to the National Energy Regulator of South Africa (Nersa) for "a massive 34% electricity tariff increase" for the coming year.

This is more than three times the current level of inflation, Cosatu said, adding that it would "strongly oppose any such increase, or anything close to it".

An increase of that magnitude would have a devastating effect on millions of already pressured consumers who are still reeling from the 27.5% tariff increase imposed by the utility last year.

Business Day reported on Monday that Eskom's application for a 34% increase in electricity tariffs for the coming year was well down on the 88% hike it was contemplating just a few weeks back.

Eskom's board is due to meet this week on its application, which was originally supposed to go to Nersa in October.

Time is running out because the current tariff determination expires on Tuesday this week, and Nersa has to hold public hearings before deciding on the next, three-year, tariff determination.

Eskom said an increase of 34%, mainly to cover increases in operating costs rather than the cost of its new build programme, would be roughly in line with the real increase of about 25% a year agreed on at last year's National Electricity Summit and takes account of the damage an excessive hike could do to an economy expected to show hardly any growth this year.

But Cosatu disputes this, saying the National Electricity Summit was clear in that it said stakeholders would work together to agree on the required price increase over the next five years.

This was in an effort to ensure that there is no excessive increase in any one year, and developing specific proposals on how to protect the poor.

Shocks to the economy

"Achieving that aim must be done in a way that ensures the poor and working people still have access to affordable electricity. The new price proposal must also avoid any unnecessary shocks to the economy," Cosatu said quoting the National Electricity Summit declaration.

"A 34% increase blatantly contradicts that declaration," said Cosatu.

It said such an increase would definitely cause "shocks to the economy" given the impact of the world economic recession, which is already causing a decline in production in many sectors, a dramatic slowdown in economic growth and thousands of lost jobs.

Cosatu said a 34% electricity tariff increase would push struggling businesses over the edge, and lead to even more retrenchments.

Last year the trade union movement lodged a submission under Section 77 of the Labour Relations Act to enable it to take strike action if necessary against the 2008 increase.

That Section 77 submission is still on the table at Nedlac and its arguments carry even greater force today.

"If Nersa allows this sort of increase, Cosatu will mobilise its members into action and if no negotiated agreement can be reached, will call a national protest strike," Cosatu warned.

- I-Net Bridge