On Tuesday, the National Energy Regulator of South Africa (NERSA) panel listened to public views presented by City of Cape Town residents regarding the proposed power tariff hike by state-owned power utility, Eskom.
Eskom, in its regulatory clearing account (RCA) application to NERSA, seeks to recoup ZAR22.8 billion ($13,543 billion) for its 2013/2014 financial year, Fin24 reported.
The public hearings, which started on Monday in Cape Town, continues today in Durban. However, according to NERSA, due to lack of public interest, hearings will no longer take place in Nelspruit, Bloemfontein and Polokwane.
Eskom exaggerates demand expectations
The RCA is for cost recovery and revenue adjustments based on actual past variances and not a revenue application based on future estimates.
According to the City of Cape Town, should the application be approved, electricity rates are predicted to increase at least by 16%.
Opposing the application was the Cape Chamber of Commerce and Industry (CCCI), which criticised Eskom stating that the public utility has a long history of exaggerating its demand expectations and making aggressive predictions.
CCCI further suggested that Eskom should manage its own costs before requesting business and customers to pay increased tariffs.
Sid Peimer, CCCI executive director, said: “Business and the South African consumer must now pay for Eskom’s mistakes.”
During the NERSA panel hearing, Peimer outlined that the chamber could not support the full tariff increase as “2016 will be a tough year for business”.
Electricity hikes to harm the agricultural sector
Equally, Agri Wes-Cape CEO Carl Opperman echoed Peimer’s views on the proposed price increase; he explained that it would harm the agricultural industry.
Opperman stated that: “The ZAR255 million ($15,155 million) cost of electricity for the entire industry would increase dramatically.”
He added, “We cannot accept the amount that is on the table, we cannot absorb it!”
Opperman also highlighted the importance of the cold-chain in the agricultural sector, whereby produce needs to be kept at specific temperatures at various stages in the production process.
The process is dependent on electricity and is also subject to interruption during load shedding.
He said load shedding had led to a 40% decline in the quality of maize crops, although the price for power remained unchanged.
Eskom replied in statement to the opposition: “We have complied with MYPD methodology rules and have also independently verified the application through auditing firm Deloitte. We therefore have comfort that there are no errors in our application.
“We [also] don’t believe that our activities could have impacted the agricultural sector to the extent that it was alleged by Mr Opperman as load shedding was implemented for only 13 hours in 2013/14 (the year to which the RCA submission relates).”