HomeSouthern AfricaGovernment opposes rapid Eskom tariff hike

Government opposes rapid Eskom tariff hike

Minister Dipuo Peter,
minister of energy
Minister Dipuo Peter, minister of energy, while speaking about the upcoming announcement by the National Energy Regulator as to Eskom’s tariff increase application, told Parliament this week
"At the outset, I must state categorically that we do not agree that the tariffs must rise rapidly.  It is our view that this will lead to unintended consequences, not least of which would be an adverse economic impact in the face of the recession we are currently experiencing," she said.
She said further that a process to cushion the indigent from increasing tariffs had been started and government would develop an appropriate pricing policy to insulate the indigent.  This is over and above the free basic electricity allocation and the process would be completed by September.
South African electricity tariffs are 70% cheaper than anywhere else in the world, which was an issue for concern, given the low electricity reserve margins, the need to additional power plants and the R27 billion ($3.1 billion) backlog on maintenance and investment in the electricity distribution industry.  The minister reiterated that the era of cheap electricity had some to an end.
"I can probably say, yes, the era of cheap electricity for industry and business, as well as those who can afford, is over," she said.
Addressing issues of communities without access to electricity, the minister said "We need to look at the balance between making sure that Eskom, as a public enterprise is viable, but at the same time, Eskom being the electricity utility company of South Africa, must be able to make sure that we as a government can be able to make it possible that our people access electricity.”
The minister said further that Eskom was not in a position to exclusively meet the country’s power needs.  "One of the most critical interventions I will introduce is the separation of the independent system operator (ISO) from Eskom," she said.
The ISO would be responsible for planning, procurement and generator scheduling to balance the system supply and demand equation on a daily basis.
"The difference brought by this initiative is that it enhances the extent to which Nersa regulates Eskom and it will lead to improved efficiency within Eskom generators.
"It is our intention initially for the ISO to be independently licensed, with the ultimate intention of establishing it as a separate legal persona owned by the state," Peters said.