Fin24

Eskom power tariff hike cut down

2012-03-09 14:35

Johannesburg  - The  energy regulator said on Friday it has cut the increase in electricity rates for power utility Eskom to 16% for the 2012/13 financial year from a previously approved hike of 25.9%.
 
The decision follows Eskom’s application to reduce the hike after the utility was asked by the government to ease up on private and industrial consumers, who have been hit in recent years with soaring power costs.
 
Energy-intensive users, including South Africa’s vital mining industry, have long said that the steep hikes are making some of their operations unsustainable.

Cash-strapped Eskom has been struggling to raise the money it needs to build power plants fast to avoid a repeat of a crisis that forced mines to shut for days in 2008 and cost the economy billions in lost output.
 
The reduction will result in a revenue loss of R11.15bn, the regulator said.

Eskom, once one of the world’s lowest-cost electricity producers, was granted three years of 25% annual rises in power tariffs in 2010 and was expected to apply for two more similar hikes after that.

Only from 2016 were tariffs expected to rise in line with inflation, but President Jacob Zuma said in February he had asked Eskom to seek options to limit the increases in rates to ensure they would not stem economic growth.

“Our concern has been that a further electricity price hike would hurt the consumer significantly and because it’s been such an important part of the growth story in South Africa, we could then seen an effective slowdown in our economy,” said Kevin Lings, chief economist at Stanlib.

Eskom has been widely criticised for fuelling inflation.

Inflation breached the central bank’s 3-6% target in November and has been outside its target band since.

The bank expects inflation to remain outside the target band throughout 2012, peaking at 6.6% in the second quarter and moving back to within the band in the first quarter of 2013.

Comments
  • schencpa - 2012-03-09 14:51

    This is a very welcome announcement, but government is on the other side killing us with huge tax increases on petrol and toll fees which will have just a bad an effect on the economy and the pockets of consumers. The public gets poorer and government richer.

      goyougoodthing - 2012-03-09 15:55

      If we were allowed to privatise electricity, this problem would go away overnight.

  • Clive - 2012-03-09 14:55

    what a shock ! most welcome never the less.

  • rick.borrett - 2012-03-09 15:07

    This is to allow the CEO,CFO and other directors their million Rand bonuses for stuffing up the electricity supply.

  • Pam - 2012-03-09 15:15

    Thank you

  • Johann - 2012-03-09 15:16

    If they stop paying huge bonusses and salaries we can actually reduce the price of electricity. They should clamp down on illegal connections and non-payers.

  • Samantha - 2012-03-09 15:27

    how can Eskom be cash-strapped and still pay out huge bonuses and have lavish parties?????????

  • betsy.compaan - 2012-03-09 15:35

    @Eishkom, if your approved hike was 25.9% then why the hell did you increase our area last month by 40%? I also never see you guys around and you love cutting our power off for a few business hours just before I press save on those important documents. What happened to all that extra money we have been giving to you guys for the last 2 years?

      David - 2012-03-09 15:47

      Eksdom supplies to municipalities, in many cases. The municipalities on-sell to the consumer.

  • Erich - 2012-03-09 15:40

    This was predictable. Eskom and their masters are using the oldest trick in the book. First create chaos and animosity by scaring the wits out of the public and then 'sugar cote' the pill by making concessions that they intended in the first instance.

  • ngoako.mathekga - 2012-03-09 15:41

    The increase is still above inflation.

  • goyougoodthing - 2012-03-09 15:41

    Cash strapped? http://mg.co.za/article/2011-11-23-eskoms-profit-jumps-up-by-r639bn/

  • comurray - 2012-03-09 15:42

    "Eskom, once one of the world's lowest cost electricity producers", obviously pre 1994. Since then it has gone to the dogs via huge bonuses to non working staff members. Let these hangers on repay their ill gotten gains.

      goyougoodthing - 2012-03-09 15:50

      I still don't understand why a government structure has to make a profit. That's like asking McDonalds shareholders to buy more burgers so that McDonalds can pay their dividends.

  • Ben - 2012-03-09 15:44

    Inflation increases as a result of Electricity increases as well as levies on fuel. This affects all the people including the poor. If we look where the money is going, it would seem as if the poor are paying dearly for the priviledge to vote for the A.N.C.

  • greggstirton - 2012-03-09 15:49

    This looks like a good time for someone to develope an electricity-generating bike that can feed into the grid - and then all the prisoners can pedal them to generate free electricity for our country. It's they least they can do.

  • markvdm - 2012-03-09 15:53

    Can't believe that people think this is great news........What the hell....let's shout 25% 25% 25% 25% 25% and then do 16% and everyone is happy......CPI is 6% guys......

  • Paul - 2012-03-09 16:02

    It is not Eskom that has been making the bulk of the profits... it is the coal industry. Coal prices have increase 70% since 2006. Why do you think Glencore has paid a record amount for Optimum Coal. Eskom should take a page out of Indonesia and prevent the export of RB#3 coal from South Africa and regulate the price. That way prices will stay the same. I suppose it is not in their interest since many ex and current Eskom board members has interests in the Eskom Coal suppliers

  • Fazlu-Rahman - 2012-03-09 16:04

    It's still not enough because they just paid R3M to an events company and who knows how many millions for the actual party! Eskom sucks and is ripping us off!

  • dustin.booysen - 2012-03-09 16:19

    So they actually wanted a 15% increase, but started off with a 25.9% threat, now have a 16% increase and everyone is thankful - Eskom really needs to realise how they are destroying South Africa's economy by this blatant extortion

  • Danny - 2012-03-09 17:30

    It ties in quite nicely with government's official inflation rate of somewhere around 5%. Now, unless I am buying a new car and new house each month I can't see how the rate can be such!

  • Leon - 2012-03-09 18:03

    16 percent is nearly 3 times the annual CPI (inflation) index. Taken into account the current economic presures to the consumer, the massive corruption and expediture record of government and the massive profits that Eskom's balance sheet exposes, a 16% raise is SCANDALOUS!!

  • John - 2012-03-09 22:05

    must have got rid of the thieves

  • Paul - 2012-03-10 07:40

    Regulate the coal industry. SA is one of the biggest suppliers of coal. Why do we need to pay international market prices for our coal ?

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