NERSA should rather focus on applications to address power crisis

12 January 2023

Solidarity is of the opinion that the National Energy Regulator of South Africa (NERSA) should pay more attention to applications from private power generators and less attention to Eskom’s applications for more expensive power. This comes after NERSA today granted a tariff increase of 18.65% to Eskom.

“The time that NERSA spends every year to consider Eskom’s tariff increase application can be spent much better on policy review to allow new entrants to the power grid to supply their services. In the end, this is the only way South Africa would be able to emerge from the current energy crisis,” Theuns du Buisson, economics researcher at the Solidarity Research Institute (SRI), said.

According to Solidarity, Eskom’s increasing debt and its dropping power supply currently pose the single biggest threat to the South African economy.

“The false choice of either Eskom getting the tariff increase or of it being dependent on even more bailouts is being presented to South Africa on an ongoing basis, but the fact remains that we see both of these harmful concessions being made every year,” Du Buisson explains. “At the moment, Eskom is caught up in a vicious cycle of supplying less and less power, thus wanting to ask more for the power that is indeed available. This is by no means sustainable though, and the only solution is to add more power to the grid – as soon as possible.”

According to research undertaken by the SRI last year, South African consumers already pay a premium of at least 27% on electricity from Eskom simply because of the ailing power supplier’s devotion to black economic empowerment (BEE).

“The premium we pay for BEE means that, for the past few years, NERSA had to grant a higher increase than was necessary time and again. It costs Eskom, and therefore also our pockets, between R12 and R14 billion per annum and it leaves ordinary South Africans in the dark while a handful of politically connected individuals are lining their pockets. We cannot afford it that Eskom allows confined interests to take precedence over the entire South African economy nor that NERSA remains a constant obstacle to those who do want to offer solutions to the crisis,” Du Buisson concluded.

Issued by Theuns du Buisson, Solidarity Research Institute: Economics Researcher, 12 January 2023