Electricity bills likely to rocket as Eskom faces R300bn pollution bill
Massive price hikes, a failure to build new power generators and invest in alternative energy, pollution by non-compliant power stations — and now SA is facing another electricity tariff hike and possible “continuous stage 8 load-shedding”.
This week Eskom successfully appealed against the department of forestry, fisheries and the environment’s refusal to approve its latest application to postpone air quality compliance timelines.
This will effectively allow it to keep the Matimba and Medupi power stations running above legal limits for pollution until the matter is dealt with again in 2022.
But experts say the latest appeal has simply stalled an inevitable conflict that is about to hit consumers hard, both in terms of cost and load-shedding.
Eskom said the overall impact of shutting down the plants, as demanded by the DFFE, would cause an immediate drop of about one-third of its total generating capacity.
“If implemented, the decision will result in an immediate shutting down of 16,000MW of installed coal-fired capacity. This would have a significant negative impact on the economy and employment, particularly in Mpumalanga and Lephalale,” Eskom said.
“As such, Eskom is engaging with the DFFE, the department of public enterprises, the department of minerals and energy and others in respect of the way forward,” said spokesperson Sikonathi Mantshantsha, who added the appeal will be heard in February, though no date has yet been given.
The DFFE and public enterprises jointly confirmed that Eskom's “late appeal” had been submitted and “the public and stakeholders are requested not to panic as there are no imminent power outages”.
In an earlier interview with eNCA, Eskom’s senior environmental affairs manager, Deidre Herbst, said: “If we comply, we will need to switch off with immediate effect, and that would result in stage 8 load-shedding, continuously.
“The full compliance that the authorities are requesting from Eskom will cost R300bn, and that would add at least another 10% additional on the tariff.”
Should Eskom be granted the additional 10%, consumers are in for a 30% increase in electricity costs within a year. And stage 8 load-shedding means power outages for 12 hours a day on average.
But energy expert Ted Blom said he believed Herbst’s estimates of stage 8 load-shedding were incorrect as “shutting down the 16,000MW of polluting stations, you are talking about level 6 load-shedding”.
“I did a quick review for 2022 and anticipate lots of level 6 load-shedding more frequently, plus the power ship's emergency power programme is stranded.”
Energy policy specialist and adviser Anton Eberhard said given power shortages, he did not foresee the shutting down of the power stations because “Matimba (apart from environmental concerns) is one of Eskom’s best-run power stations and Medupi is one of the newest”.
He predicted consumers were in for electricity price increases of 20% a year for the foreseeable future to cover Eskom’s operating and capital costs, and the risk of load-shedding would continue.
Mervyn Abrahams of the Pietermaritzburg Economic Justice and Dignity Group said a 30% electricity tariff increase would be “a disaster for the economy as a whole”, coming when “the country has not yet recovered from the impacts of state capture and Covid-19”.
He said the price hikes will spark a cycle in which people will use less power because they can’t afford it, illegal electricity connections will increase and drive up Eskom’s costs, and expensive power will raise costs of “absolutely everything”, fuelling inflation and interest rates.
“This will hit the middle class, with their home loans and car payments. They will then cut back on domestic help, which will then again hit the poor who will cut down on the quality and quantity of their food. We have seen this starting to happen already with the recent 15% increase,” said Abrahams.
Economist Dr Azar Jammine agreed, explaining that Eskom’s need for more income was both desperate and justified thanks to a legacy of bad past decisions and poor management by the government.
“There are many at fault. The people themselves are responsible for stealing electricity, and for electing the government that is letting them down. People have looted Eskom, and authorities are doing nothing about it.
“The unions have been resisting groundwork for change and have been opposed to breaking Eskom down into three separate entities to improve effectiveness and competitiveness. It’s very complex.”