Eskom must be clear on prices

2012-10-15 16:35

Johannesburg - Eskom's application for new electricity increases should reflect its costs and be transparent, the Energy Intensive Users' Group (EIUG) said on Monday.

"Currently, tension exists with affordability of electricity to customers at one end, and the need for cost-reflective pricing that supports a viable and funded electricity sector on the other," said EIUG chairperson Mike Rossouw.

Eskom is compiling its third Multi-Year Price Determination (MYPD3) application for review and approval by the National Energy Regulator of SA (Nersa). The application covers the period 2013 to 2018.

Economist Mike Schussler was quoted by the Mail & Guardian as saying that electricity prices in South Africa were set to rise by over 200% in the next five years.

Schussler said from 2005 to date, electricity prices had increased 91%, while inflation had risen only 35%.

Said Rossouw: "These increases will continue to hit all consumers in the pocket and will, furthermore, undermine the viability and international competitiveness of commercial and industrial exporters."

The burden on commercial and industrial customers was further exacerbated by hidden cross-subsidies embedded within the current tariffs, he said.

Rossouw said Eskom's revenue and electricity price methodology was "if prudently applied, economically sound".

He said there was a need for greater transparency and accuracy in the cost making up Eskom's revenue requirement and the associated electricity pricing. Costs had to be benchmarked to ensure they were prudent.

He proposed that Eskom should manage operational costs and risks, and use optimal technology in generating new capacity.

Rossouw said an initial view communicated by Eskom in the mandatory consultation process signalled increases of between 14.5% and 19% a year for the five-year period.

"Such above-inflation increases to power prices would inevitably impede economic growth, job creation, particularly in the more energy intensive resources, manufacturing and production sectors," he said.

  • larry.piggott1 - 2012-10-15 16:47

    Eskom will never reveal the Generating and transmission costs, as this would sho the blatant crookery and incompetence. They would not answer why is costs twice as much to build a power station here, than anywhere else on the Planet.

      christelle.james.7 - 2012-10-15 16:50

      I think what is also very important, is that people are billed for exact usage, and not on a guess. Start reading the meters guys - so if people go all out to save energy, they actually see it in their account!

      archangel.zerachiel - 2012-10-15 17:05

      @ChristelleJames: you are missing the point: Electricity on South Africa will be prohibitively expensive very soon because of the INCOMPETANCE OF EKSDOM. Nothing to do with the meters being read of not. Have a look at how many millions of users are not paying? (check your local township and all the illegal wiring that exists under EKSDOM's nose. If they were to recover the cost of usage from EVERY USER the price would decrease by 80% - Yes, DECREASE BY 80 PERCENT. But will the do that? No! As the cANCer (pre -'94 elections)told them this the country belonged to them therefore: FREE HOUSING, FREE ELECTRICITY, FREE WATER, FREE ROADS, FREE PUBLIC TRANSPORT, FREE EDUCATION - who is going to pay for all that FREE stuff? Check you rates account, check your water account, check your electricity account ... need I say more?

      BigChiefPlumbPudding - 2012-10-15 17:13

      Really, I don't know how clearer Eskom can be on their pricing. It's really very simple - pay a hell of a lot more for a hell of a lot less. What more clarity is required?

      christelle.james.7 - 2012-10-15 17:16

      Arch - I agree, and part of the incompetence is what I mentioned. Not at all taking away from what you are saying, just adding.

      JaredVN - 2012-10-15 17:27

      What we'd really like to see is how much smelters like BHP Billiton's pay per kWh, compared to ordinary consumers. The fact is that commercial clients pay a fraction of what consumers pay. Doesn't it make you feel good, Mr Consumer? You are in effect subsidizing obscenely rich companies' electricity.

      heathway.master - 2012-10-16 10:45

      Eskom has probably just become another bloated and fat Government Parastatal. Its employers are most probably amongst the best paid in the country, as well as executive bonuses being the most fat. Its employee costs have probably reached such an unsustainable figure, that it suddenly needs these economy destroying increases to feed the vociferous employee animal. As in the old days, all capital costs such as new power stations were always funded by international loans, with possibly a 20 - 30 year payback period. These incompetent clowns appear to be trying to finance a substantial proportion of new development from the debt ridden and financially crippled population. Eventually electricity costs will start exceeding double your monthly house bond payment. Time for us all to move on to candles and small primas cookers or wood and coal fires to survive, as our forefathers did 100 years ago. The large users of electricity like the mines and heavy industry cannot afford ever increasing electricity costs, and still survive in a competitive world. Goodbye more jobs for thousands of the population to join the ever increasing unemployment queue.

  • sandy.sutherland.58 - 2012-10-15 16:48

    Does no-one else find it funny that Ekom threaten blackouts when it nears time for them to apply for a rise in tarrifs, yet if they get the go-ahead there are none - as far as I know they are not able to build a new power station in the time between applying for the raise and getting it? I must admit - the term 'Protection Racket' springs to mind, and when they post record profits and spend millions on parties, I am guessing we are getting raped - so Eskom = organised crime!

      archangel.zerachiel - 2012-10-15 17:06

      @Sandy: true .. check my post about and see if you might agree.

      dean.cent.9 - 2012-10-15 17:11

      absolutely organised crime. AND.....apparently ANC (c-er) is massively behind the shareholding of this fraudulent incompetent operation. What about if all those that pay stopped? Mind you...i am embarrassed by my fellow South Africans. Why do those that shout loud do little to back it? Big talk but little backsides.

      dean.cent.9 - 2012-10-15 17:35

      do you know what...they are so damned big. Not only does it destroy us and hurt when we get raped but....ouch these big boys have one of the biggest tools to rip us apart and the consequences are, we are being destroyed by them (err, and so ripped apart). Our country is being destroyed by the shareholders of these incompetents. Oh No.....I have just remembered a re-occurring theme - ANC are massively behind them. Is it not time for class action against such criminals? Why must we pay them every month. Who the hell can afford the cost to date let alone a further 200% increase?

  • sbisschoff - 2012-10-15 16:49

    200% increase over the next 5 years?! How much more must the consumer be shafted by these blood-sucking parastatals?

  • jay.reede - 2012-10-15 17:01

    Bring in competition !

      robqb - 2012-10-15 17:54

      @jay. Do you really think government is going to allow competition? Me thinks not.

  • werner.friesenbichler - 2012-10-15 17:04

    whatyou expect its goverment

  • tilly.vanoudtshoorn - 2012-10-15 17:09

    If we all refuse to pay Eskom and use wind up lights,lanterns and candles and cook on gas, how would they be able to pay their millions in bonuses? In the "old days" corruption and white collar theft was rare news, now it's an every day occurance. Makes you think doesn't it?

      robqb - 2012-10-15 17:58

      @TILLY.VANOUDTSHOORN. When the winds of change blew and a lot of people changed to gas stoves, can you remember the sudden shortage of LPG?

      tilly.vanoudtshoorn - 2012-10-15 19:38

      @robqb my point was rather a "sarcastic" than a factual suggestion as in hahahahaha hehehehehe LOL LOL LOL

  • sthembiso.jali.50 - 2012-10-15 17:27

    Nothing is ever transparent when it comes to eskom or petrol sa. They rip us off

      robqb - 2012-10-15 18:00

      @ sthembiso.jali.50. As transparent as milk.

  • carl.debeer.33 - 2012-10-15 17:43

    This makes me sick!Running a small business is tough as it is and now a new increase is on it's way...Stuff the meter reading companies too!.. We are now forced to consider closing our business which means more unemployment and no income for those working here.Pigs!

      Paul - 2012-10-15 18:41

      Carl you dont shut a business down because electricity gets more exspensive, you adapt. Weather it be cutting costs or putting your prices up but you do something

  • khethu.ndlovu.3 - 2012-10-15 17:47

    I am not paying a cent to the fat cats, ill bridge n they will neva catch me

      paul.chick.501 - 2012-10-15 18:12

      Ja and its the likes of you that are a big part of the problem as was mentioned by Archangle earler

  • Dustin McCrindle - 2012-10-15 18:25

    Invest in a pre-paid meter, it'll cost a little, but then they cant screw u over after that with disgusting estimates after that. Also, go solar if u can afford it. A friend of mine saves at least R500 a month on electricity bills since installing a solar heater, just for their geyser. Oh, and gas stoves help as well. Lets not get messed around any more than we have to...ooh, ooh, ooh, last 1 I promise! BRAAI MORE, probably best advice there is!!!

  • david.makola.3 - 2012-10-15 19:19

    Hold on, is there a regulatory body that legitimizes these increases? Or is it just a monopolic liberation on Eskom's side. How much more can we pay? Eskom must take their CEO's huge salary and utilize imstead.

  • carl.debeer.33 - 2012-10-15 21:11

    @Paul.Do you own a Business? Try running a Restaurant and let me know where to cut on costs without jeopardising on quality and standard, let alone specialised chefs and ingredients, and other overheads like rent. The biggest problem added to it is we are also paying a "management" fee to a company that take our meter readings. An extra R5000 A MONTH IN THE LAST TWO MONTHS.You probably own a salary. It's common sense to cut down on some costs...if you can.

      paul.chick.501 - 2012-10-16 06:08

      Sorry Carl i guess that comment was not very constructive. The resturant game is "very hard" and was hard even before electricity became as exspensive as it now, i just refuse to fail no matter the circumstances and i have have never in the many resturants and clubs i owned and was involed in "failed". I came realy close a few times but all im saying is dont give up just like that (unless you got a big backstop).... Wish you all the best

      paul.chick.501 - 2012-10-16 06:45

      Dont close down sell it on to some other oke and let him blast his life savings on his romantic resturant dream, worked for me

  • espri.moodley - 2012-10-15 22:09

    At R1.24/kw prepaid isn't cheap. The place i rent is locked at this tariff. No amount of complaints has resolved this.

  • arthur.salvado - 2012-10-16 07:47

    Outright theft. Can't call it anything else but "bonus pot". Public must do so etching to stop all this replenishment of stolen funds. The taxpayer has the say and must exercise it. NOW

  • leonard.rom.7 - 2012-10-16 11:31

    eskom must be clear how much they stealing

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