FMF: SA needs independent grid

2012-11-13 14:42

Johannesburg - South Africa needs an independent operator in the electricity sector, the Free Market Foundation (FMF) said on Tuesday.

A single grid owner and operator, South Africa's current model, resulted in a lack of competition, FMF director Eustace Davie told reporters in Johannesburg.

This created the potential for excessive charges and difficulties in gaining access to the grid. A better scenario would see an independent system operator created to buy power from competing countries, said Davie.

Allowing Eskom to go ahead with its 16% tariff increase application would be disastrous for the economy, he said.

"There is a price tsunami that's about to hit the country, and it's going to carry on for four or five years."

Firms would close down because they could not afford electricity, he warned.

The FMF is a lobby group advocating for less government intervention in the economy.

Davie questioned figures contained in Eskom's latest multi-year price determination for the next five years (MYPD3).

The submission provided for a return to government of R186.8bn over the period, which the government should forego. Eskom's depreciation costs had also been calculated at the current replacement value of assets, rather than their historic value. This had added a further R279.5bn to Eskom's revenue requirements.

He questioned the need for R13bn to be spent on integrated demand management, a programme which, he said, included the cost of buying back power from large energy users.

"Independent experts, technical and financial, must interrogate the figures contained in the MYPD3," Davie said.

"The matter is too important to be decided upon without thorough investigation."

  • jaco.bruwer.73 - 2012-11-13 15:10

    if Eskom's 16% increase for 5 years is accepted, it will be a major factor in the sharp increase of jobless people in south Africa due to the fact that small bignesses will close indefinitely.

      charlesbronson.bronson - 2012-11-13 21:46

      There is no way in hell that the corrupted useless tax thief Jacob "Compound" Zuma will aloud that any one else to take money from the corrupted cANCer thief's!

  • henry.vanderburpenfart - 2012-11-13 15:13

    Eskom are creating a seriously vicious downward spiral which goes as follows: They hike the price of electricity, which causes us to use less and come up with ways of saving more, all the while having less disposable income. The drop in electricity usage results in a drop in income for Eskom (all the while paying massive CEO bonuses), who in turn raise the price again to make up for "losses"...which makes us find ways to use less electricity. It's like trying to borrow your way out of debt. Do I support a competitor? YES!! But...and here's the big BUTT - It has to be done properly. The competitor must be truly independent and not subject to any of the whims of the Eskom so that they can set reasonable pricing, offer realistic services and be a BETTER alternative. An example of a failure of this nature, despite huge potential, is Neotel as an "alternative" to Telkom. Then again, how can a startup hope to compete against a former Apartheid entity that has massive infrastructure that could only have been provided on a government level and continues to be propped up by the government despite being a miserable failure? Makes you think of SAA doesn't it?

  • denny.cray - 2012-11-13 15:54

    Yep, preferably more than one competitor actually.

  • stirrer.stirrer - 2012-11-13 16:03

    Here's what bugs me: one of the motivations for the price hike, is that Eskom needs the money to buy electricity from the independents. Now, if we have already paid for the independent power via the price hike, will Eskom give it to us for free, or will they sell it to us at the going rate, so we pay for it TWICE?

  • mfanah.radebe - 2012-11-13 16:04

    oh God!

  • Blixum - 2012-11-13 16:23

    Cynical response from the FMF. A couple of years ago their head honcho, Leon Louw, has said on SAFM that all the old coal power stations should be blown up. Change of direction now? And why should we now take note of your comments, stating the obvious in any case. FMF cannot be trusted anymore as they have become irrelevant in any case.

  • ludlowdj - 2012-11-13 16:26

    he forgets to mention that 38% of the profit Eskom makes goes directly to government, who also through their municipal mark up are profiting indirectly already. Eskom is a state monopoly that must be crushed. Current solar technology advancements mean that a basic set up costs around R250 000,00 and although it will not replace the grid per say will put a serious dent in the amount of money Eskom makes. The State of course will still get it pound of flesh through taxes, vat and any savings you may be able to accumulate however any viable future in this country by the middle class will depend on how self sufficient you can become and how much you can prevent the government extorting from you. Remember that government has already passed legislation into law that allows it to charge you fees on any gray water you may be able to accumulate, in effect this means that if you install water tanks to collect rainwater etc, they will still charge you for it by measuring and charging you according to sewerage flow from your property.

  • cb.nel - 2012-11-13 18:28

    The solution is renewable energy. If you think about it, by allowing consumers to feed electricity back into the grid you actually solve more than one problem with one move. There are issues to address. Municipalities will lose a steady flow of income, admin around the creditationd for consumers feeding electricity back into the grid, how will the consumer be compensated for the kilowatts fed back into the grid, safety concerns for workers on the grid and so on. In a perfect world you generate electricity during the day - meter runs backwards and you use it in the evening - meter runs forward. I have heard Eskom is all for the idea, the municipalities are the ones not playing ball.

  • hein.huyser - 2012-11-13 20:32

    Not less government, no government involvement in most areas

  • rodney.scholtz - 2012-11-13 21:28

    It does not have to continue in this manner.

      Blixum - 2012-11-14 14:47

      hahahaha You believe that website Rodney? All they promise is to relief you of your money. Good luck my friend.

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