'Eskom hike could lead to vicious circle'

COSATU yesterday called for Eskom's 34percent price hike application to be rejected and for consultation on its funding model to be fast-tracked.

COSATU yesterday called for Eskom's 34percent price hike application to be rejected and for consultation on its funding model to be fast-tracked.

"Electricity production by Eskom, consumption and distribution to provinces declined by 7,2percent, 5,5percent and 7,4percent, respectively, for the first quarter of 2009, compared to the first quarter of 2008," Cosatu's industrial policy coordinator, Jonas Mosia, told public hearings into the application.

Coupled with a bleak economic outlook, this should prompt the regulator to reject the application, Mosia said in a submission at the hearings being conducted by the National Energy Regulator of South Africa (Nersa) in Pretoria.

"Over 208000 jobs have been lost due to the financial crisis. Poor households would bear the burden of high electricity tariffs," Mosia said.

Research into high electricity prices in countries such as Ghana showed the danger of steep increases.

High prices could lead to a "vicious cycle" where people defaulted on their payments, were disconnected and resorted to illegal reconnections.

He said Eskom's application was an interim one and suggested that Nersa should wait until September to consider an increase.

Eskom has indicated that it intends putting in place a funding model in September.

After Mosia's short presentation, Nersa adjourned the hearings. They are set to continue today.

Earlier, Eskom's chief executive Jacob Maroga said the hike was for the benefit of South Africa.

"This application should be seen as a country application which requires a country dialogue," Maroga told the public hearings.

"This is not about a 34percent for Eskom . it must be driven by the aspirations of South Africa first, rather than the interests of Eskom."

Eskom's application has raised the ire of civil society and labour movements, many of whom will present their arguments during the two-day hearings at the CSIR convention centre in Pretoria.

The regulator has received 170 submissions on Eskom's application, 25 will be heard at the hearings. - Sapa

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