Decision to keep electricity prices stable a victory for South Africans

I am ecstatic at Minister of Energy, Dipuo Peters' decision to hold off on further escalations in electricity prices in the next round of multi-year price determinations. 

This is exactly what the Democratic Alliance (DA) has been campaigning for since July this year.

If we applied the old pricing system to the upcoming nuclear build programme, the costs would have been ruinous. Consumers would have had to pay billions of rands more into the build programme and electricity prices would have been hiked even further. 

However, it is essential that the National Energy Regulator of South Africa (NERSA), Eskom and the Minister of Energy move quickly to develop the necessary pricing and funding agreements for the nuclear build programme. 

Government and consumers cannot take on a R1 trillion project on their own. I will therefore write to the Minister today to request a further meeting with NERSA in order to discuss alternative solutions to our energy funding challenge. 

The DA pushed for a new funding model to keep prices stable with three important facts in mind:  

No further increases are necessary to sustain Eskom's current operations:

Eskom has become exceptionally profitable on the back of recent price hikes. For the six months ending in November 2011, Eskom reported a R12.8 billion profit. 

No level of electricity price hikes will ever be able to pay for the development of new power plants: 

For example, the upcoming nuclear build project is expected to cost anywhere between R400 billion to R1 trillion. We simply don't have enough consumers to pay for that investment. The money must be sourced from private investors.

It is possible to construct new financial agreements for the upcoming nuclear build programme that won't necessitate further price hikes: 

In short, the plants can pay themselves off over time due to the unique pricing structure of nuclear power plants that allows for the plants to operate profitably over a long timeframe. This means that the plants can pay back investments from private investors over time. 

By keeping electricity prices as low as possible we help government and business to conduct their operations more cost-effectively, thereby leaving more resources to invest in growth and job creation. Lower electricity prices are advantageous to all South Africans. 

Statement issued by David Ross MP, DA Shadow Deputy Minister of Energy, December 9 2011

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