Fin24

Eskom wants 16% tariff increase

2012-10-22 10:19

Johannesburg - Power utility Eskom said on Monday it has applied for a 16% annual increase in electricity rates over five years to pay for new plants and buy power from independent producers.

The state-owned utility said the increases, from April 2013 to March 2018, would include a 13% annual hike for its own needs and a 3% rise to support the introduction of independent power producers.

Eskom's Chief Executive Brian Dames said the utility would spend R337bn on capital expenditure over the next five years and would need R78bn over the same period to buy power from independent producers.

Eskom is currently building three new plants - Medupi, Kusile and Ingula - with the first power from them at least a year away.

"We have not included any new build expansion beyond Kusile in our tariff application," Dames said at a media briefing ahead of the announcement. The Kusile plant is expected to be commissioned in 2018/19.

Eskom has been struggling to raise the money it needs to build power plants fast enough to avoid a repeat of a 2008 crisis that forced mines to shut for days and cost Africa's biggest economy billions of dollars in lost output.

Energy-intensive users, including the vital mining industry, have long said that the steep increases were making some of their operations unsustainable. Unions have also protested over the impact of above-inflation hikes on everyday South Africans.

Eskom, once one of the world's lowest-cost electricity producers, has been granted annual increases of 25% in recent years.

Earlier this year President Jacob Zuma asked Eskom to seek options to limit the increases to protect economic growth and the last 25% hike was cut to 16%.

The increases could put additional pressure on consumers, already battling with the fallout of the global economic woes, and mining houses that are battling to contain labour unrest that has brought some of their operations to a standstill.

The rand and government bonds showed little immediate reaction to the news.

Comments
  • christopher.laurenz.5 - 2012-10-22 10:30

    If they had brains to upgrade and not steal the taxpayers money those many years ago, this would not be happening.

      frank.vankaapstad - 2012-10-22 11:01

      This is exactly why parastatal companies are bad for South Africa. And this is what happens when the ANC implements racist policies that have incompetent egotistic cadres running key national companies. Remember Jacob Maroga, former CEO of Eskom who took home millions but managed to stuff up Eskom? Thank him and "our" Government for this, another BEE success story. Don't hate current Eskom management, they inherited this problem. Had the best person, regardless of race, always been chosen to run Eskom since 1994, things would be different.

      eva.walle.75 - 2012-10-22 11:29

      So will Eskom's executives also "tighten their belts"? Doubt it.

      daleinn - 2012-10-22 11:41

      Ever wonder why people strike , and why electricity increases contributes to the downfall of economy? why the government are so quiet about it, and put an independent system called nersa...it controls the amount of money they get back from eskom. Tell me why was Zuma so powerful , that he and not NERSA, was able to regulate the last price increase??? if the government can reduce the burden and cost of living for all citizens in the economy..ie. electricity, food , fuel , transport, regulate costs on borrowing, we would see real growth in the country... but i guess everyone is just after the fat pay check, including government.

      nicholas.graan - 2012-10-22 12:09

      The time has come to allow for independent operators to enter the market. I can see (like with the tolls) this is just going to become an excuse to extort as much money from consumers, a lot of which will no doubt be diverted to other pockets and government departments.

      denis.dendrinos - 2012-10-22 12:28

      "We have not included any new build expansion beyond Kusile in our tariff application," Dames said at a media briefing ahead of the announcement. In other words they reserving the right to increase tarrifs again very soon. and Christopher spot on! 1994 we say everyone going to get electricity, but at no point did they wonder where it'll come from!

      abner.malema - 2012-10-22 13:43

      thank, you said a mouthful

      boipelo.mmekwa - 2012-10-22 15:40

      had money been allocated to projects like this,instead of renovations and Jets,this would not been happening,but what really bugs me is that the last Eskom financial report looked good so why arent any of those profits reinvested to build new plants

  • greypatriot - 2012-10-22 10:32

    CRAZY!!!!!!!!!

      alan.gernet - 2012-10-22 11:24

      OHM.y that's SHOCKING. WATT ever next? I thought 7% would be AMP..le

      clifford.sithole.5 - 2012-10-22 11:49

      Thank goodness most of us in the townships don't pay for lectricty

      rontheogre - 2012-10-22 11:55

      With the consumer financing the expansion of ESKOM, strictly we should become shareholders. Why do they not finance this by selling shares as many other companies do? Or are they afraid of being held accountable for what happens to the money. It will mean no more R45 million parties or ridiculous bonuses for non performing bosses.

      nicholas.graan - 2012-10-22 12:10

      Yebo Clifford, that is what we are here for.

  • robbie.crouch - 2012-10-22 10:35

    Clearly they are not talking the same language as the ANC...

  • brendon.alberts - 2012-10-22 10:36

    So that the incompetant bastards can have a 45 million party !!!!

  • aroka.murombe - 2012-10-22 10:36

    Y can't the government subsidies the electricity and fuel instead of wasting money on zuma ville or what ever they call it?

  • Sheilan.Clarke - 2012-10-22 10:39

    If squatters went to jail and ordered to pay for stealing electricity, Eskom would not have to spike up the prices.

  • annelise.venter.7 - 2012-10-22 10:39

    Then we would have to let staff go.

  • bevan.carpenter.1 - 2012-10-22 10:41

    another unprofitable government institution that is looking to avoid a bail-out by helping themselves to the poor consumers.

  • wimpie.ferreira.7 - 2012-10-22 10:48

    why can't we buy power from independent producers directly?

      stirrer.stirrer - 2012-10-22 11:17

      What gets me about the 3% - if the already pay for Eksdom to buy the electricity from the independents, will they then give it to consumers for free? If not, why do we have to pay for them to buy it?

  • andre.kopper.98 - 2012-10-22 10:49

    16% per year for 5 years will mean more than double what you are currently paying, it is daylight robbery, and a total disgrace, shame on you escom

      dirk.brink88 - 2012-10-22 11:54

      and keep in mind the past few years escalations of 35% 45% and so on... I think its a increase of 350% over the last few years

  • gavin.scott.7731 - 2012-10-22 10:50

    So it was true, double the price of electricity over 5 years!!

  • ludlowdj - 2012-10-22 10:50

    Eskom's expansion and upgrades are not the taxpayer or end users problem, unfortunately the government as a 38% shareholder will give them the increase anyway. Get used to Government partnered companies using ratepayers and taxpayers money to increase its own ability to generate extra income and then charging the ratepayer a second time for the privilege

  • Julia Griffiths - 2012-10-22 10:50

    The increase does not justify the service delivered over the past year

  • ryno.warwick - 2012-10-22 10:55

    And i want 16% increase from my Job. Since i can't just go and ask for increases why can they? Use some of that bonus money the CEO of Eskom is raking in.

  • riaan.barnard.737 - 2012-10-22 10:56

    The governnent is asking for no pay increase but they want to increase everything!

  • chiepner - 2012-10-22 10:56

    And all South Africa citizens would like to see a 50% decrease in senior managements pay as well as the freeze of all forms of bonusses annually paid out to senior management as well as a salary freeze on all senior ESCOM management. Could we as South Africans possibly see this?

  • nhlapop - 2012-10-22 11:01

    What???????? Malusi Gigaba must deny Eskom for this. They are mad. I hope NERSA will also deny this increase. The must also decrease patrol price.

  • darryl.earnshaw - 2012-10-22 11:04

    Paying for all those RDP houses that the tenants can't afford to, the more they build the more you'll pay. Thank Zuma for now that 250 million he's just spent......

  • comurray - 2012-10-22 11:05

    A question for Eskom: Why is the gas price not subsidised? this would save much needed electricity for industry. I personally use gas for heating in winter only because it is instant heat, a 190 kg bottle refill costs R 190.00 which is by no means cheap. I then also have gas available for cooking & lighting during power outages.

  • theunis.hamer - 2012-10-22 11:05

    Ekurhuleni rates up 53%. What is the use to block Escom at 16%?

  • crracker.crackerr - 2012-10-22 11:06

    If you ask more the chances are you will eventually get more as part of a so-called compromise. The people can't afford the increases. Increasing the number of noughts in our currency to balance the competing demands will not do the trick. People will simply start losing their belongings in the process. Disaster coming.

  • Deon de Lange - 2012-10-22 11:07

    Time for some competition. And besides, SAfricans should refuse to pay more until the ANC's investment company, Chancelor House, gets out of the consortium building the power stations. Billions of tax spending for ANC coffers is just more daylight robbery.

      Klaus - 2012-10-22 11:25

      Refer Carte Blanche, Sunday 21 October 2012 - BEE,BEEEEEEEEE, thats were our money go's to

      Klaus - 2012-10-22 11:28

      Also, Municipalitys "write off" Billions in uncollected electricity bills, why! Easy, screw existing rates & tax payers - what can they do?

  • rob.gunning.1 - 2012-10-22 11:08

    If they get their increase, they'll just squander it on parties to congratulate themselves for doing such a fantastic job, or maybe some nice bonuses for those that don't deserve them.

  • comurray - 2012-10-22 11:09

    Ok, so when all these new power stations are complete and delivering power will our electricity charges be reduced. I think not.

  • Netshituni Takalani - 2012-10-22 11:09

    NOoooooooooooooooooooooooooooooooooo!!!!!!!!!!!!!!!!!!!!!

  • phillip.vanniekerk.5 - 2012-10-22 11:11

    Well well well. Another sad day for South Africa. The time has come to design our own Future!

  • steve.ritchie.739 - 2012-10-22 11:11

    After 1994, zero vision, zero maintenance, closing of appy schools, taking of fat bonuses because they thought they were making big profits all equates to the Eskom of today - another cANCer cock-up of note.

  • TheFrancoisHavenga - 2012-10-22 11:12

    They got us by the short hairs anyway. i see this as an Enron scam . they had the chance to keep the old ones going and expanding then. anyways, the salary they get they shoud take a cut because one of those salaries can keep koeberg going per month

  • staunchy - 2012-10-22 11:13

    open up wide and say aaaaaaaaaaaaaaaaagh

  • J.Stephen.Whiteley - 2012-10-22 11:13

    Why don't senior management take a 16% decrease in their salaries over the next five years? Kathy

  • andrez.kolesky - 2012-10-22 11:15

    I'm KO, ........ lights out (pun intended)

  • BigChiefPlumbPudding - 2012-10-22 11:16

    Eskom. Pay more for less. Seminars and meetings out in exotic luxury locations (I last saw them in Mabalingwe Game Reserve - why is that necessary?); parties; massive payouts for bonuses for screwing up big time. Sorry guys but we're being robbed again, and on a massive scale.

  • brendan.vogt.1 - 2012-10-22 11:18

    From the M&G...2010/2011...... Eskom’s directors’ remuneration report reveals that R18.5-million was paid to executive committee members, compared to last year’s R8.8-million. The biggest winner was human resources head Bhabhalazi Bulunga, who pocketed 507% more at R3-million, compared to last year’s R501 000. And now they want more from the consumer ?????????????????

  • mabongimthembu - 2012-10-22 11:18

    The money that is being use on Zuma's House, that was the money to be used to subsidies electricity problem and fuel. But No it all about Zuma and his family

  • galmzala - 2012-10-22 11:21

    then soon we will be needing amalahle (coal) to use for cooking, baking, warming our house we cannot afford these hikes and nothing is going down everythin is going up up and up,

      galmzala - 2012-10-22 11:24

      consumer boycott it is the way to go

  • merleneg - 2012-10-22 11:24

    Ridiculous and absurd…if Eskom’s Management does there job well and they know what they are doing, there would be no need for such unrealistic demands on the local community…either they hire a capable management or we bring a competitive energy supplier that will force Eskom to reconsider their rates.

  • chris.flack.750 - 2012-10-22 11:27

    Eskom just wants, wants, wants. What about what we want?

  • belinda.swanepoel.18 - 2012-10-22 11:31

    So they can pay their employees 14th and 15th cheques?!!

  • TheSingingHorse - 2012-10-22 11:48

    So much for the capex . How much for bonuses, wasteful expenditure on labour procurement , employment agencies and the like.

  • Thermophage - 2012-10-22 11:51

    It sucks, but our electricity is still relatively cheap by world standards. And we are generally VERY wasteful as a nation. We will just need to learn to be more efficient with our use. And to be honest then you shouldn't see much increase in your bill. At least then Eskom should have some additional money with which to complete projects and bring electricity to a greater proportion of the country?

      J.Stephen.Whiteley - 2012-10-22 11:58

      Why is South Africa compared to world standards? It is the municipalities who are wasteful, leaving lights on all day, and what about big businesses? Eskom will never have additional money with which to complete projects because they WASTE it. - Kathy

      Thermophage - 2012-10-22 12:01

      Perhaps. But the general populous is wasteful as well. Our electricity is relatively cheap currently. We've just been too used to the low price and now everyone just freaking moans instead of trying to find a way to better use it. Pathetic if that is all you are doing!

      Thermophage - 2012-10-22 12:04

      http://en.wikipedia.org/wiki/Electricity_pricing

      Mary Milne Archibald - 2012-10-22 12:14

      Impossible to compare to world prices when our gross domestic income is so low

      Thermophage - 2012-10-22 12:34

      Yet our costs to produce the electricity are the same...? Of course one can compare.

      vivian.harris.73 - 2012-10-22 12:55

      Why are we compared to the rest of the world??? This is SAfrica...my R1 doesn't buy they same as a $1 or £1. In that case I want my salary to be the same as that of the rest of the world...And I lived in the UK for 7yrs and electricity isn't expensive.

      Thermophage - 2012-10-22 13:44

      Wow...the ignorance amazes :|

  • kgotso.selome - 2012-10-22 11:51

    do we have a choice, can we say no?

      eva.walle.75 - 2012-10-22 12:26

      Our "democracy" does not allow us to, I'm afraid ...

  • JamesMWood - 2012-10-22 12:00

    At home we have usage drastically, yet the cost still goes up, what do they expect from us, I wish solar was more available so if anyone has any ideas of how to go of the grid please let me know, so tired of eksdom, worst parastatal ever!

  • joe.sokolic - 2012-10-22 12:07

    solar is the way forward, My entire house runs off solar panels. I have no eskom bills... no power failures.. just google solar panels in your relevant province and get some pricing on a system. solar panels have halved in price the last 3 years while eskom has almost doubled!!!

  • planetleon - 2012-10-22 12:18

    If they only listened to the predictions 20 years ago!

  • Mary Milne Archibald - 2012-10-22 12:20

    Eskom needs to examine pricing structure to eliminate unpaid amounts and encourage households to convert to prepaid. With prepaid Eskom has guaranteed payment. Prepaid should be offered at a lower unit price to post-billed unit price. All new houses should be on pre-paid. Bad debt will be lower, more money in Eskom pocket for expansion programs. Eskom should also freeze all performance bonuses, unrealistic in the current Eskom fiscal shortfall.

  • hugo.mcdonald.7 - 2012-10-22 12:21

    I think I should let my kids study solar engineering or candle making and gas oven design....there should be a HUGE market very soon... In fact...sign me up!

  • vanessa.kilian.94 - 2012-10-22 13:08

    Dit is belaglik ! Eskom se werkers verdien massiewe salarisse en vet bonusse hulle kantien is uit die boonste rakke alles blink by hulle maar onder vrot hulle .Hoe in jou lewe moet SA se mense by bly alles gaan op en die \fat cats\ word fatter .

      thelma.flynn.96 - 2012-10-22 13:11

      Not all the employees get fat salaries that I can assure you. Only Management fall in that category

  • thelma.flynn.96 - 2012-10-22 13:13

    Plants? What an excuse. Only to give themselbes the management bigger bonuses

  • kooskanmar - 2012-10-22 13:20

    They will single handedly push this country into a resession and be responsible for thousands and thousands of job losses in every single industry that simply won't be able to afford electricity costs. Another proudly South African moment right here, sponsored by the ANC.

  • john.dough.5836711 - 2012-10-22 13:23

    Eskom are nothing but economic terrorists!

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