Price of power set to double
Power utility Eskom is set to choke consumers by doubling the price of electricity in the next five years.
In so doing, the state-owned company plans to raise more than R1-trillion - a move that will see consumers digging deeper into their pockets.
Eskom is to present its proposal on how it plans to increase prices for a period of five years to National Energy Regulator of SA (Nersa) later this month.
Should Eskom get its way, electricity will increase from 60c per kilowatt per hour to 112c.
This will have dire consequences for the poor as households who use up 100kWh bought directly from Eskom for 60c/kWh would see their monthly electricity bill shoot up from R60 to R120 a month.
Those who buy their electricity directly from municipalities will face much steeper increases because of mark-ups added by municipalities after buying bulk electricity from Eskom.
For example, households in Tshwane who consume up to 100kWh will end up paying close to R200.
Sowetan has seen a confidential document Eskom is due to submit to the energy regulator for approval requesting revenue totalling R1.7-trillion over a five-year period.
This translates into 16% increases for the first four years and 9% for the last year.
While Eskom is trying to strike a balance between keeping the lights on and ensuring its financial sustainability, the document indicates that such an increase poses a threat to jobs in energy-intensive sectors such as mining and manufacturing.
"Any further delays will have a negative consequences on the financial viability of the industry and Eskom," it reads.
It suggests that below inflation increases - which had been the case over the years - would lead to further downgrading of Eskom by ratings agencies and would effect its future projects, including infrastructure build.
It also suggests the increases are another way of forcing consumers to use less electricity.
"Cheap electricity would result in increased energy demand, which would in turn lead to more pressure on generating capacity and require the acceleration of infrastructure expansion.
"Cost-reflective prices encourage customers to use electricity efficiently."
- This article was first published in the printed newspaper on 11 October 2012