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No to power hike

By Sashni Pather | Jun 10, 2009 | COMMENTS [ 0 ]

CONSUMERS will be hardest hit by Eskom's proposed tariff increases and municipalities are up in arms because they cannot cushion consumers against the hikes any further.

"At the end of the day the consumer will have to bear the burden because the council get its money from consumers. If this increase isn't approved it will be good for everyone," said City of Johannesburg spokesman Virgil James.

The National Energy Regulator of South Africa held public hearings over the past two days about the power utility's proposed 34percent tariff increase.

The Nelson Mandela Bay municipality, Cosatu, the Anti Privatisation Forum and trade union Solidarity have, among other groups, slammed Eskom's proposal.

Both the Johannesburg and eThekwini municipalities said they had budgeted for a "30percent" increase to come into effect on July 1.

Logie Naidoo, eThekwini's deputy mayor, said: "We anticipated a 30percent increase and budgeted for that, but what Eskom is doing is out of our hands. We tried to cushion the effects of a price hike by fixing water and rates and taxes."

Naidoo said his municipality did not approve of what Eskom was doing.

"We are trying to make our voice heard through local government organisations."

James said: "What we now have to consider is how to factor in the additional 4percent increase. We will have to see if this is approved and then decide how to implement these forced changes and pass on this difference."

The Nelson Mandela Bay municipality said it had budgeted for a 26,5percent electricity tariff increase. It said not enough consultation has taken place and Eskom would be putting municipalities "directly in the line of fire".

Cosatu has called on Nersa to reject Eskom's application.

Economists have warned of bleak times if the application is approved.

Director of Mike Schussler said: "There are not many businesses or worker getting that type of increases. It is not the appropriate time for a 34percent increase.

"This will have negative effects that reach further than inflation rate hikes."

Nedbank's chief economist Dennis Dykes said consumers would be spending "2percent more" from their already strained budget on electricity if the hikes were approved.


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