Consumers bled dry by Eskom, NERSA, and municipal contradictions
19 November 2024
A combination of Eskom’s inability to prudently manage its operations, NERSA’s failure to assist Eskom to sustainably meet its targets without massive cost increases, and unregulated municipal surcharges, places electricity provision in South Africa fundamentally at odds with the aspirations of the developmental state.
End users of electricity are having to pay the costs for these technical and bureaucratic conflicts and challenges inherent to the country’s electricity supply regime.
It is Eskom and NERSA’s collective responsibility to use their expertise to navigate the country away from the patently absurd point it have reached, with Eskom’s proposed 36.15% tariff hike for direct customers threatening to re-devastate an already devastated economy.
To make matters worse, the tariff hike translates to a 43.55% increase for municipalities, to which unregulated municipal surcharges must be added. And there are multiple reforms and changes to subsidy structures that will impact the most vulnerable in society.
The proposed TOU (Time-of-Use) tariff reforms, for example, raise concerns about equity, feasibility and the injustice of pricing electricity beyond the means of low-income households and small businesses.
South Africans already pay among the highest electricity prices in the world relative to income. Is it unfair to continue asking consumers to pay more without addressing the entire system’s inefficiencies.
Section 16(2) of the Electricity Regulation Act states that a licensee may not charge a consumer any other tariff than those approved by the Regulator. The Municipal Fiscal Powers Act, however, allows municipalities to implement surcharges, as long as they comply with norms and standards issued by the Minister of Finance, but no norms and standards have been issued.
We have already seen the result of this incoherence in the City of Cape Town, which for the past two years has implemented tariffs higher than permitted by the regulator – and is spending millions of Rands of ratepayers money litigating against NERSA for the right to charge what it wants.
The impacts of these tariffs are to deepening inequality rather than alleviate it.
In the circumstances, Eskom’s proposed revenue increase is unjustifiable. It must be put on hold while legal contradictions in the electricity supply system are addressed.
We urge Eskom, municipalities, and NERSA to prioritize the people they serve. South Africans are entitled to affordable, reliable electricity – not as a luxury, but as a basic right.
Issued by Brett Herron, GOOD: Secretary-General, 19 November 2024
