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Cape Town - Trade union Solidarity, the City of Cape Town and the DA have all lauded the National Energy Regulator of South Africa (Nersa) for standing firm and showing independence in the face of Eskom’s demands.
Eskom had asked Nersa to approve an additional 9.58% price hike. This would have brought the total increase this year to over 22% after prices also rose in April. The power utility is facing a funding gap to 2018 of up to R200bn.
READ: Nersa says no to Eskom tariff hikes
Solidarity said it is encouraging that Nersa is forcing Eskom to consider alternatives other than additional price increases. Deon Reyneke, the union's head of the energy industry, praised Nersa for standing firm against Eskom’s demands. “Never before has there been such a strong reaction against planned energy tariff hikes. The increase would have had devastating consequences,” Reyneke said.
“The time has come for Eskom to accept responsibility for its own problems. Several workable solutions for Eskom’s problems have been raised; solutions that could finally alleviate the crisis. To charge the public more for electricity is not one of them,” Reyneke said.
The City of Cape Town has also welcomed Nersa's decision. "We welcome the comments by the Nersa chairperson that Eskom’s application was incomplete and did not include all of the information required to take a decision, and that it was not consistent with the requirements of the constitution and the Municipal Finance Management Act," said Ian Neilson, deputy mayor of Cape Town.
"We applaud Nersa’s display of independence, openness and integrity in this process.
"The decision means that the tariff increases for the city’s own electricity customers of 10.82%, as published during our budget process, will be implemented on July 1 2015, based on the 14.24% increase of Eskom’s bulk tariffs to municipalities, as previously approved by Nersa," said Neilson.
READ: Why Nersa snubbed Eskom
Democratic Alliance shadow minister of energy Gordon Mackay likewise lauded Nersa's "strong and credible leadership".
"This decision ought to be hailed as a victory for all electricity consumers, for our economy and for every unemployed South African," said Mackay.
He added that load shedding is robbing South Africans of their livelihood, as investors lose confidence in the economy and the manufacturing industry is forced to cut jobs.
"The electricity crisis has already cost the economy billions and resulted in countless job losses. Passing the problem on to consumers through above-inflation tariff increases adds insult to injury, and cannot be supported," said Mackay.
"Despite ongoing pressure by government and the ruling alliance, Nersa demonstrated true independence today by refusing to be strong-armed into exorbitant tariff increases that would have had disastrous consequences for our economy."
Nersa's decision paves the way for the long-term reform of the energy sector in South Africa, said Mackay. The Department of Energy and Eskom should now break Eskom's monopoly through greater competition within the sector, an increased focus on renewable energy and the rejection of expensive nuclear energy.
He added that it is now time for the cash-strapped power utility to seek funding from the private sector through the sale of a 30% equity stake in Eskom, which should be listed on the JSE.
"A public-private partnership of this nature will raise billions of rands, strengthen Eskom’s financial position, introduce skilled board members to the parastatal, and improve overall management of Eskom," said Mackay.
