Fin24

Electricity prices chasing jobs away

2012-12-07 14:44

Cape Town - Eskom’s tariff demands will more than double the cost of electricity – and this at a time when South Africans already find electricity less affordable than consumers in many other countries. The cost of electricity to the industry will also impede investment into South Africa.

This is the stark warning of new research just released by leading economist Mike Schüssler, CEO of economists.co.za.

“Eskom has applied for an annual 16% rise over the next five years, which would mean a cumulative increase of 110% – that’s more than double,” says Schussler.

Compiling data on 15 different professions, including teachers, factory workers and bank clerks, he compared the affordability of electricity in 33 countries.

The research found that workers in 18 of the 33 countries find electricity more affordable. These countries include the USA, Switzerland, Japan, France and the UK. In only 14 of these countries workers found electricity less affordable than in South Africa. From this high base it would be difficult for South Africa to compete in the cost structure of the economy.

“One could rightfully understand Eskom’s tariff request if prices were still at their previous low levels, but, due to the massive increases in recent years, we are already facing high tariffs, particularly for households,” says Ben Venter of Sasbo, which co-sponsored the research along with the Energy Intensive User Group.

Mike Rossouw from the Energy Intensive User group noted that from 2002 the South African industrial energy prices have shot up by more than 250% in real terms, which, according to this research, “is the highest increase found anywhere in the world.”

Schüssler also revealed that whilst much of the attention of these electricity price hikes is focused on Eskom, many users will also face high mark-ups when their electricity is provided through municipalities. National Treasury data reveals that municipalities have an obscene mark-up of 75% on average for water and electricity.

The research shows that over the last seven years South Africa has had the highest increase in electricity prices in the world – double that of the second highest country. The proposed 110% increase over the next five years would have also been the highest over the last five years. “Local governments are effectively using electricity to balance their books,” says Venter.

The research also highlights the way in which South African consumers and most industrial customers are heavily dependent on electricity, and have little alternative but to use electricity as their only energy resource.

“The research further revealed that in many parts of Europe, gas is available as an energy resource for most households or businesses,” according to Venter.

“Gas is much cheaper than electricity and is widely used for cooking and heating in homes and, particularly, in industries,” says Rossouw.

“The report showed that South Africans derive 90% of their energy from coal, who are mostly customers of Eskom, and there is no realistic alternative.”

The report’s conclusions are:

- The National Energy Regulator (NERSA) must not only focus on Eskom, but must also cap tariff hikes prepared by municipalities.

- Tariff increases must return to inflation-related increases as soon as possible.

- NERSA must only allow efficient cost for Eskom and eliminate extraordinary expenses such as in primary energy and wages.

- Our international ranking in terms of electricity tariffs cannot be ignored, and NERSA must study the OECD data to understand that South Africa no longer has lost its competitive edge in energy prices.

<span name="cms_embeddedimage_672a0ae3-9145-45f7-ac7b-7a485a91b546" class="cms_embeddedimage"><img src="https://cdn.24.co.za/files/Cms/General/d/2209/1032dea913084959aae3c1ece0812628.png" alt=" " ></img></span>

Source: Meter-it and economists.co.za

<span name="cms_embeddedimage_98729d1a-ac70-4ba4-8aaf-8cd81a9b553f" class="cms_embeddedimage"><img src="https://cdn.24.co.za/files/Cms/General/d/2209/83601b2e343c46a3a3d65450fbc89c98.png" alt=" " ></img></span>

For more information, call Ben Venter, Deputy General Secretary, Sasbo – The Finance Union – on 011 467 0192 or 083 407 8335

Comments
  • Klaus - 2012-12-07 15:11

    My electricity cost, per Kw works out to R 1.51 which includes all those mysterious side charges - This is HIGHER than in countries like Germany. We are a private household in the northern regions of Johannesburg - But than again, the brothers & sisters in Soweto own R 3,3 Billion in never recoverable outstandings.

      kortbroek.duplessis - 2012-12-07 15:34

      Germany is a first world country, and South Africa is a banana republic. How on earth can we be expected to pay these prices for second-rate unreliable electricity when people with a much higher income in Germany pay less?

      fussed.anderson - 2012-12-07 16:22

      Eazy solution, Convert to 12 volt and gas, go back to parafin fridges and F@%$K eskom

      alicia.myburgh.69 - 2012-12-07 19:37

      FACT: ****Rotterdam**** Family of 4, utility costs (gas+electricity) = €110 or R1232.82 ****Randburg**** Single person R1800pm...

      carol.proost - 2012-12-09 06:55

      Who is worried about jobs ,as long as the ANC selected comrades get filthy rich

  • raymond.page.391 - 2012-12-07 15:11

    And what kind of profit did Eskom declare for the last financial year?!

  • Anthony C. Onwudiegwu - 2012-12-07 15:12

    it is dissapointing to have those who are emplyed on the bases of their surposed qualification, experience and know hows to dissapointing those whose confident they enjoy, which win them the office and power to precide over tarrif increase. there are other ways escome can increase ellecticity efficiency without having to task the public. what ever amount is requires by Escom that amount can be realise through the sale of shares to the public.

      amber.rancic - 2012-12-07 15:48

      There's an easy solution: you simply have to realise that those you vote for don't have your best interests at heart, and should not enjoy your confidence. Eskom wouldn't need the extra money from increses if they could only administrate the company in a responsible, non-corrupt way.

  • PumaFred - 2012-12-07 15:15

    But it is creating 100s of non productive jobs in Eskom

  • Justin - 2012-12-07 15:27

    So is crime, redtape, BEE, deteriorating governance, unskilled labour, low productivity, high income taxes, lack of financial management....... What's news about this. With no Leadership and transformation (health department) that has moved too fast - that's what happens = equality in place of quality.

  • trevor.pietersen.3 - 2012-12-07 15:40

    THEY want to give ZOOM ZUUM anothe MILLION party

  • andremandela.julias - 2012-12-07 15:41

    Another cANCer success story.

  • quintessential.quintessential.1 - 2012-12-07 15:41

    Eskom is putting on a smokescreen public relations campaign with a purported aim of "saving electricity" with campaigns like 49m and wacky notices on television "electicity consumption is high, switch off appliances". If Eskom had been serious about this, it would introduce a night/day tariff which would encourage consumers to reduce consumption during peak periods (by installing a night/day metre for every household). This would however lead to a drop of its revenues. Furthermore there is no option for households to input electricity into the powergrid (i.e. through solar/wind energy), which would be offset against what is consumed from the grid.

  • james.bondiski - 2012-12-07 15:44

    Well Duh !!! The more the ANC steals from the country the less likely it is to get investors . economics 101

  • chere.nienaber - 2012-12-07 15:47

    Funny really... Only 16%?? So why did my electricity increase by 22% this year and 25% last year?? Btw stay in Pta.. Guess City of Tswane have pushed up their prices as well... Mmm

  • hdludlu - 2012-12-07 15:49

    Electricity & petrol are the main ernemy of the poor. Pity those who take increament decesion for the two are filthy rich. The poor will indeed remain poor in this way yet they blame people for being over indepted. Where do they think we get the money to sustain our day to day lives????

  • fussed.anderson - 2012-12-07 16:22

    Eazy solution, Convert to 12 volt and gas, go back to parafin fridges and F@%$K eskom

  • steve.botha.560 - 2012-12-07 18:04

    I put in a few decades of my working life with Eskom and was committed and proud to continue doing a honest day's hard work (knowing chances for promotion were zero) and be a positive supporter of and participant in all well thought-through initiatives to address and solve the many challenges facing Eskom. But, alas, I got the message very clearly that my sincere contributions and honest and positive criticism of problem areas to identify problem areas and gaps to close were met with quite a stern and clear response from the new "leadership" to stop "stirring", know my "new place" in the "new order" and learn to play the new political game and not try to be too smart or dare to highlight anything I think is going wrong, as it might expose things that might imply I am attacking a section of the rainbow nation which is a BIG no-no. So, I got the message that my contributions were not required and quietly left. I think what I can offer is appreciated in my new country. It could have been so much different if these new ideology driven "leaders" can just accept we are happy to get paid less, not get the promotion, but just want to be treated with respect and be left to carry on and contribute in the team for the good of the company and country. But, you had to do the "payback thing"and everyone lost. I wish Eskom well. Such a great company with great people. All you as new leadership need to do is accept that the "previous advantaged" would have loved to be part of the solution if you could have just been able to put aside your overwhelming desire to make it as uncomfortable as possible for us and make sure we know clearly "we had our time". I look forward reading some time in the future that Eskom is again amongst one of the top electricity utilities in the world as it was in the early nineties.

      Blixum - 2012-12-09 12:20

      Well said Steve. But unfortunately Eksdom has been tainted by the white man's input and has to be completely reformed to the black man's 'management' style (or lack of it).

  • shyjakes - 2012-12-07 22:31

    Hahaha you cant do me nothing i am goverment backed and no consumer protection to bother me . You trouble me i do rolling shut downs . Eish i have my xmas chicken to party then thank you also for my new year party . we love the 49million people that have too use our product some time in ther life Regards Comrade in plundering

  • jason.rom.9 - 2012-12-08 08:51

    and closing business and putting south African in big debit crises thank you eskom

  • altus.kirsten - 2012-12-08 08:52

    SA going down the toilet.

  • dbcrazy.gp - 2012-12-10 11:08

    All is this Eskom & Petrol hikes and the ANC government is worse than RAPE!! We are not free we are now officially imprisoned! The day is creeping closer and the day I can't afford to buy even a bread I'm going AWOL!

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