ESKOM PRICE HIKES FORCE CITIZENS TO CHOOSE: FOOD OR LIGHTS

ESKOM PRICE HIKES FORCE CITIZENS TO CHOOSE: COOK FOOD OR LEAVE THE LIGHTS ON?

PRESS RELEASE 

FOR IMMEDIATE RELEASE

CAPE TOWN, Western Cape, Thursday 29 November, 2018

Background

Eskom has been granted a number of tariff increases by the National Energy Regulator of South Africa (NERSA) amounting to a 300% increase from 2007 to 2015 – more than six times the inflation rate for the same period. The Department of Energy (DoE) estimates that 47% of South Africans are ‘energy-poor’ (more than 10% of their income is spent on energy needs) and these households struggle to access sufficient energy services to meet their basic needs.  They are also limited in their choices around safe and reliable energy alternatives that are not damaging to human health and environment.

In low-income communities such as Hillview, Project 90 by 2030 has learned that families are buying electricity units at R10 a time and they are thus forced to choose between cooking OR heating water OR keeping the lights on!  The Inclining Block Tariff (IBT) used by municipalities and ESKOM, divides the electricity price into “blocks” – the lowest block being the cheapest – and as electricity is used through the month, the unit price increases once the minimum units are used – making electricity increasingly unaffordable as the month progresses.

ESKOM is again requesting an additional 15% tariff increase for the next three financial years.  If a household currently spends R500/month on electricity, the price will increase to R575, R650, and then R725 by the third year.  Electricity tariff hikes will wipe out the SASSA grant annual increases, meaning that more household income will be eroded by electricity expenditure.

Who is NERSA?

The National Energy Regulators of South Africa (NERSA) are mandated to determine the prices at which electricity may be supplied by ESKOM consistent with the South African Constitution and in the public interest.  Eskom’s mandate is to “provide electricity in an efficient and sustainable manner.” Thus NERSA have a legislative duty to safeguard the public and ensure that ESKOM is held in check so that South Africans avoid the additional burden of unnecessarily increased electricity prices.

What is the MYPD process?

The Multi-Year-Price-Determination (MYPD) methodology is used by NERSA to determine how much revenue ESKOM can collect on a three-yearly basis and the objectives include, inter alia, ensuring reasonable tariff stability consistent with the socio-economic objectives of the government.  Each year ESKOM has to project how much electricity they will sell annually, based on their customers’ needs. If they spend more to make electricity than they receive in sales, they are allowed to claim that difference back from NERSA and the cost difference claimed back in the next MYPD process and included in the next tariff price application.  ESKOM are currently overstating their projections and then claiming the difference from NERSA in the form of tariff hikes! 

Important considerations for this MYPD4 request

• ESKOM is requesting an annual increase (for three years) of 15% on tariffs, which will likely be at least 17% depending on each municipality.
• High electricity tariffs will encourage more households – those who can afford it – to move off grid and start generating their own electricity. This results in a loss of revenue and will impact cross-subsidization of poorer households. In the end, it is the poorest of the poor who will feel the biggest burden.
• Climate change, the biggest crisis facing society today, has an impact on our environment, health and economy. Our energy choices have a direct impact on Climate Change. Coal is becoming more costly, in the economic, social and environmental sense and a Just Energy Transition is required urgently.  
• The application states that ESKOM is projecting a 0.7% increase in revenue over the MYPD period yet there is evidence which suggests that actual electricity demand has decreased in recent years (since 2013). So Eskom should adjust its forecast in line with the current demand for electricity and Eskom should also not be allowed to try and claim this difference back in the future.

Call To Action

There are currently two opportunities to have your concerns heard and considered. 

• Written comments can be forwarded via email to mypd@nersa.org.za or hand-delivered to 526 Madiba Street, Arcadia, Pretoria. The closing date for written comments on the MYPD4 application is 30 November 2018 at 16:00. 
• Oral submissions. Members of the public and stakeholders who wish to attend or present their views at any of the public hearings must submit their request to publichearings@nersa.org.za by 15:30 on 4 January 2019. Stakeholders are requested to make separate oral representations on the MYPD4 revenue application and the MYPD3 RCA Year 5 (2017/18) application at the public hearings.

Public Hearings: Dates and Venues

Project 90 by 2030 is making both written and oral submissions in the Western Cape.

If you require any further assistance, please email info@90by2030.org.za. 

About Project 90 by 2030

Project 90 by 2030 is committed to strengthening civil society cooperation, capacitating local communities and empowering young climate leaders in the pursuit of a just and equitable energy transition.  We aim to inspire and mobilise citizens, business and government to uphold  low carbon actions that are better for people and the planet. For more information, visit https://www.90by2030.org.za

Contact:

Natalie Geyser, Media Relations

natalieg@90by2030.org.za

+27 (0)76 739 0237

# # #

FOR MORE INFORMATION, DOWNLOAD MYPD4 info pages final