Public flips the switches in Eskom debate

The public hearings being held by the National Energy Regulator of South Africa (Nersa) on Eskom’s controversial request for a threefold 35% electricity increase are generating some sharp rays of light in an otherwise dark period for the country.

Eskom is, unsurprisingly, not emitting this light, which instead comes from myriad suggestions about how to deal with the electricity crisis. The intensity of the public’s engagement with Eskom’s plea for more money is itself a cause for hope.

From farmers to ratepayers, miners to trade unionists, bankers to academics, engineers to environmentalists, all have done their homework. Despite not having full access to all Eskom’s financial and contractual information — which Nersa will have — various groups have crunched the numbers the parastatal is using to justify its (revised) application.

The numbers show that such a swift and steep increase may hamper the country’s recovery from the economic crisis, curb its growth and threaten jobs.

Ideas about ways to prevent this include splitting South Africa into two time zones, introducing daylight saving and spreading the demand across peak times — a suggestion from the South African Institute of Electrical Engineers.

From trade union Solidarity comes the proposal to grant an increase of 25% but control more tightly items such as Eskom’s coal costs and curb the ratcheting up of prices by other parties, particularly municipalities.

Common points have emerged from diverse presentations at the hearings. Support for independent power producers (IPPs) is one, as is the criticism that Eskom may not have calculated its costs or valued its assets appropriately.

And the suggestion that Eskom should sell off assets, such as power stations, to meet its funding requirements and further delay, if not halt entirely, the building of the Kusile power station has been made more than once.

Representing some of the largest electricity users in the country, The Energy Intensive Users’ Group (EIUG) maintains “that an appropriate legal and regulatory framework to convert South Africa from an IPP-hostile environment to facilitate the introduction of IPPs must be urgently introduced”. Medupi and Kusile, the group says, are simply too expensive as well as too late.

Research prepared by Genesis Analytics on behalf of the Chemical and Allied Industries Association points out that in its application Eskom first determined its funding requirement to continue its business and to complete its building programme — and then set about justifying the escalation in tariffs.

This is tantamount to Eskom “determining how much money it needs and then finding ways to justify it”, argues Genesis Analytics partner James Hodge.

The Genesis research suggests that a 25% increase is a much fairer figure. It says there is scope for further reductions if certain cost items are scrutinised more closely.

It finds that the planned capacity outlined in the hastily gazetted Integrated Resource Plan may be excessive once South Africa passes beyond the riskiest, most power-constrained period — the years up until 2012.

This, it says, suggests that work on Kusile can be delayed, if not halted entirely, and that Eskom’s funding shortfall could be eliminated if Kusile is shelved.

But, like the EUIG, the Genesis report argues that South Africa cannot solve its power problems without letting IPPs enter the electricity sector. And, again like the EUIG, it posits the option of selling off assets such as older power stations in their entirety, rather than a share in Kusile, for example, as a way to attract investors.

Nersa “cannot police Eskom”, as Peet du Plooy of the WWF environmental organisation notes, but it can demand that the utility prove itself a technically and economically efficient licensee.

The ANC will no doubt have something to say about the country’s future power mix — not least because of its valuable stake in both Medupi and Kusile through its investment arm, Chancellor House.

Despite a painfully clear conflict of interest, Gwede Mantashe is unapologetic about Chancellor House’s standing empowerment deal with Hitachi Power Africa, which will supply boilers to both stations.

Several heavyweights, including Cosatu, the South African Communist party and the Treatment Action Campaign, have declared their lack of faith in Nersa. “We — believe that Nersa has long ago taken a decision on this matter to grant Eskom its 35% increase and these public hearings are meant to just comply with the law,” they say in a joint statement issued on Wednesday.

But while South Africans may have lost faith in Eskom, and even Nersa, they should not lose faith in themselves — their lights upstairs are very clearly on.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
Advertisting

Not a sweet deal, Mister

Mister Sweet workers say they will not risk their health, and the lives of others, to continue producing and packaging confectionaries

Covid-19 grounds Nigeria’s medical tourists

The country’s elites, including the president, travelled abroad for treatment but now they must use the country’s neglected health system

Nehawu launches urgent court bid over protective gear for health...

The health workers’ union says the government has rebuffed its attempts to meet about mitigating risks to workers

Stay at home, Cyril said. But what about the homeless?

In Tshwane, forcing homeless people off the street resulted in chaos and the abuse of a vulnerable population. In Durban, a smooth, well-planned operation fared far better

Press Releases

Everyone’s talking about it. Even Kentucky

Earlier this year South African fried chicken fast-food chain, Chicken Licken®, launched a campaign for their wallet-friendly EasyBucks® meals, based on the idea of ‘Everyone’s talking about it.’

New energy mix on the cards

REI4P already has and will continue to yield thousands of employment opportunities

The online value of executive education in a Covid-19 world

Executive education courses further develop the skills of leaders in the workplace

Sisa Ntshona urges everyone to stay home, and consider travelling later

Sisa Ntshona has urged everyone to limit their movements in line with government’s request

SAB Zenzele’s special AGM postponed until further notice

An arrangement has been announced for shareholders and retailers to receive a 77.5% cash payout

20th Edition of the National Teaching Awards

Teachers are seldom recognised but they are indispensable to the country's education system

Awards affirm the vital work that teachers do

Government is committed to empowering South Africa’s teachers with skills, knowledge and techniques for a changing world