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TIGHTROPE: Eskom cooling towers near eMalahleni in Mpumalanga. The utility is trying to strike a balance between financial viability and keeping the lights on. Photo: Financial Mail

REPORT: Eskom CEO Brian Dames

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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

Comments

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Wed May 22 14:43:39 SAST 2013 ::

Oct 12, 2012

RobinH

ESKOM has become an ineffective nightmare drain on citizens. No performance bonuses this year, please.
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Oct 12, 2012

MommaC

Haai vokit. I'm moving to Botswana. I'll still get Eiskom electricity but at a third of the price.
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Oct 12, 2012

Tabza325is

And the citizens will complain moan but at the end of the day they will submit to authority and they will pay...
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Oct 12, 2012

MOKOPANEDUDE

Zuma upgrading his house in inkandla with amount of R236m that must help the poor as subsidy to eskom
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Oct 12, 2012

eltybots

ur goverment refused to invest in mmamabula power project wey eskom wil b buying power from botswana cos of large quantities of coal available.Electricity wil hv bin cheaper so is because of ur country ignorant bigbrother mentality and wil find itself isolated. so u r not welcomed here unless u r a DR or investor
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Oct 12, 2012

RobinH

Tabza: So what would you suggest we do? Buy generators and end up paying a fortune for petrol?
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Oct 12, 2012

bytheway1

Further crippling an already crippled society. It is a shame! And who is worst of? The poor! ANC... where are you?
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Oct 12, 2012

Mogwapatholo

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.
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I thought electricity is a basic service, how do you then control a basic service demand by increasing the prices like it's in open market. oh poor people. i'm already paying more than R1 per kilowatt with this increase i think it will be safe for me to start budgeting for solar system.




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Oct 12, 2012

Shredder

Mantle a tlo ella le metsi mo. Throw us back to the 70s. Take away your electricity man. We will use the candles and coal stoves. Nxa!!
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Oct 12, 2012

BopCat

I think it's time we took the government to task. The cost of living is going up at an alarming rate. This will eventually have to be absorbed by the companies in a form of salary increases which also still won't be enough, now my question is, what about those that are unemployed? We have to pay for medical aid, armed response and private education for our kids. If government delivered on their promises of safety, security and good health care system maybe then we would be able to afford such things as electricity and rising food prices.
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