Power growth behind high tariffs - Eskom
POWER utility Eskom says it took into account the government's power expansion programme - the Integrated Resource Plan - in determining its steep tariffs.
This energy plan comes with a price tag of R3.5-trillion, but will cost the power utility R300-billion to fulfil because it will involve the building of additional coal-fired power stations, Medupi and Kusile.
Eskom spokeswoman Hilary Joffe said Eskom had already secured 78% of the funding required.
At the end of March this year Eskom's debt stood at R180-billion. This is expected to skyrocket to R350-billion over the next few years as a result of this energy expansion programme.
Eskom was trying to convince the mining industry and the government to keep the cost of coal low because it was the main cause of the price hikes.
Coal currently accounts for 50% of Eskom's operating costs. But keeping the cost of coal at a single digit would reduce returns to private sector mining companies.
Eskom defends its application for the above inflation price hikes, saying this would encourage high levels of investments in its power generating capacity.
Eskom has been left to assume how much new generating capacity it will be allocated between itself and the Independent Power Producer.
Also adding to the tariff cost is the carbon tax that the National Treasury wants to implement.
It is also expected that a carbon tax would be passed through the electricity tariff.
Joffe said: "We are building lot of new capacity to meet the country' s need and have to be in position to finance it.
"We have to borrow large amounts," she said.
- This article was first published in the printed newspaper on 11 October 2012