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Electricity price hike was debated by big business, interest groups and power utility

By unknown | Nov 23, 2007 | COMMENTS [ 0 ]

Robert Laing

Robert Laing

Big business and public interest groups received the opportunity to argue with Eskom yesterday over its request to increase electricity prices by 18percent next year, followed by 17percent the year after.

Five interested parties accepted the National Energy Regulator of South Africa's invitation to make presentations.

The line-up included the Chamber of Mines, Air Liquide, Gender and Energy Research and Training, Vuyo Energy and the Affordable Housing Institute.

Eskom chief executive officer, Jacob Maroga, said the utility needs to sharply increase its tariffs because it has to finance a R1trillion expansion programme over the next 20 years.

Besides needing more power stations because of the country's rapidly growing electricity consumption, Eskom needs to replace most of its existing power stations.

The regulator questioned whether Eskom was paying too much for coal. But the Chamber of Mines' presentation focused on defending the prices that coal miners charge the power utility.

Maroga argued that one of the advantages of raising electricity prices was that it would discourage wastage.

Eskom estimates about 3gigawatts of power could be saved a year by encouraging the industry to invest in demand side management technology.

The regulator's councillors quizzed Maroga and other Eskom executives on whether the utility could finance its expansion by borrowing money rather than increasing its prices.

There was also concern that the hike could effectively turn into a tax, with government as Eskom's sole shareholder pocketing the higher profits as dividends.


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