The implementation of regional electricity distributors (REDs) should not lead to price shocks, but the economies of scale should result in more competitive power prices in the longer term, Western Cape regional general manager of the planned first RED Leon Louw said last Tuesday.
Addressing a media briefing, he said that about 40 municipalities and Eskom were distributing electricity in the Western and Northern Cape. The target in these areas is for Eskom and the Cape metropolitan council to establish the first RED in June this year.
Six REDs are expected to be in place by January 2007. The implementation will involve all municipalities around the country with a metropolitan council in each of the six distribution areas.
Each municipality has its own billing regime and Cape Town, for example, has been staving off a shortfall of about R250-million a year by adding about 12% to the cost of electricity supplied to ratepayers. Louw noted that municipalities will ultimately have to raise rates to reflect costs of general service provision.
It is envisaged that Eskom and the municipalities will hold shares in the REDs, Louw said, with, for example, Eskom holding about 40% in the Western Cape and Northern Cape RED. The government owned EDI Holding, meanwhile, will hold “a golden share” with powers of veto.
This veto could apply to matters such as the supply of cheap power to the poorest of the poor and to decisions regarding infrastructure, particularly in under-serviced areas.
Cape Town will make a final decision about whether it wants to buy into the REDs model by about March or April, Louw said. — I-Net Bridge