The question of whether the government or the public should finance Eskom dominated the first day of hearings on Friday on the utility’s proposed 53% tariff increase.
Eskom’s non-executive chairperson Valli Moosa opened the debate at the National Energy Regulator of South Africa (Nersa) public hearings, saying fiscal injections from government were needed.
”The question is who or what to subsidise, so that it does not have perverse and unintended consequences.
Moosa asked whether Eskom could afford to subsidise higher income earners in Sandton, Hyde Park and Bishopscourt, saying it was the high income groups who were the most inefficient power users.
In fact, fiscal injections should be used to alleviate the plight of lower income groups whose power usage was minuscule.
”Lower income earners are not the ones who got us into this problem. The ones who use the most power are higher income earners — commerce and industry.”
But speaker after speaker said that it would be the poor who would be hardest hit by Eskom’s proposed rate increase.
”It will have a detrimental, multiplier effect on the poor,” said member of the Cape Town mayoral committee, Clive Justus.
Poor households in Cape Town would face a 30,5% increase on their municipal bills if Eskom’s price hike was approved.
Cape Town councillor Louise Muller said a R190 000 household would face an increase of R102,56.
”It’s absolutely phenomenal”.
The municipal manager of the Steve Tshwete Municipality in Mpumalanga, Willie Fouche, echoed this point.
”In our municipality it would lead to an average increase of R115 per month. This might not sound much to the financially well-off, but to a lower income level this is a great expenditure,” he said.
”While Eskom over the last 15 years have made electricity available to the poor, now it plans to make it unaffordable,” said Paul Crankshaw of the National Consumer Forum.
”They expect consumers to continue to bankroll a non-performing monopoly.”
Madalet Sessions, a researcher for Investec Securities, said that while everybody blamed Eskom, the government should not be let off the hook as it was the sole shareholder in the utility.
With any other business when there was a need for expansion, it was the shareholder who carried the equity.
Sessions added that current consumers should also not pay the price for future power usage.
”Economically it does not make sense.”
The Chamber of mines said that while it supported an increase in Eskom’s tariffs it should gradually be phased in over five years and be based on primary costs.
Dick Kruger, a chamber adviser, said the government had to provide additional support to fund Eskom’s expansion programme.
Kruger stressed that a two-pronged approach — remedial steps to restore electricity supply as well as the promotion of greater efficiency in the use of electricity — needed urgent consideration.
Jacob Maroga, Eskom’s chief executive, was ”by and large” in agreement with the summit’s proposals to gradually increase prices.
However, he said the utility was still asking Nersa for the 53% hike because it did not know how much the government would inject into it.
”We have got a revenue requirement that needs to be satisfied,” he said.
Throughout the hearings a group from the Anti-Privatisation Forum sang and signalled its opposition to the hike.
Eunice Mthembu, a member of the Soweto Concerned Residents group, which falls under the forum, said: ”They are killing us, government is killing us. They are not thinking about the poor, they only think of the rich who live in Sandton.”
Some of the protesters wore T-shirts that read ”Eskom stop giving away our electricity”.
The public hearings will continue on Tuesday. – Sapa