OUTA has come out against Eskom’s price applications, calling for an overhaul of the failing utility.
The Organisation Undoing Tax Abuse (OUTA) has submitted objections to Eskom’s requested price increases to the National Energy Regulator (NERSA).
OUTA believes that Eskom’s woes are due to challenges embedded in its business model which cannot be addressed by merely raising tariffs. Instead, this requires a holistic solution which has yet to be provided.
OUTA particularly opposes the price increases due to Eskom’s long history of corruption, mismanagement, overspending and inefficiency.
OUTA opposes both Eskom price applications.
The first is the Multi-Year Price Determination (MYPD4) application to set electricity prices for 2019/20 to 2021/22. The second is the application in terms of the Regulatory Clearing Account (RCA) for under-recovery during 2017/18.
The MYPD4 application
In the MYPD4 application, Eskom wants an increase in revenue which requires a price increase of 15% a year, in addition to the 4.4% increase from the already approved RCA award for 2014 to 2017.
“Eskom’s 15% per annum electricity price increase over the next three years is premised on desperate measures or attempts by Eskom to want to fix structural problems by throwing money at the problem rather than addressing or fixing the underlying root causes,” says OUTA’s submission.
OUTA is concerned about Eskom’s runaway costs, including its huge wage bill, its coal spending, its massive debt which has ballooned to almost R400bn and is expected to grow to more than R600bn, and the ever-increasing cost of the new build.