By Shaun Gillham
THE decision by South Africa’s energy regulator to cut the increase in electricity rates for Eskom to 16% for the new financial year has been hailed by Eastern Cape ratepayers and business organisations as a “significant relief”.
Eskom had proposed that the 25.9% average price increase be reduced to 16% and this was approved by the National Energy Regulator of SA (Nersa) on Friday.
Eskom was in 2010 granted three years of 25% annual rises in power tariffs and was expected to apply for two more similar increases after that.
Only from 2016 were tariffs expected to rise in line with inflation. But President Jacob Zuma said last month he had asked Eskom to seek options to limit the increases in rates to ensure they would not stem economic growth.
The reduction will result in a loss of revenue of R11.1-billion, the regulator said.
Nelson Mandela Bay Ratepayers’ Association chairman Kobus Gerber said the decrease in the tariff would “lighten the load” on households. “While it is sad that we have to contend with increases of this nature, it will come as a relief to ratepayers and electricity consumers, who are already burdened with escalating costs, to deal with a lesser increase,” he said.
Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said the 16% tariff was a “welcome indication that government is listening to the voice of business on this issue, which has a major impact on the ability of local industry to be globally competitive”.
“It is clear the active lobbying by organised business nationally and in the regions has been effective in ensuring the interests of industry are taken seriously by national government.”
It was “pleasing” to see swift action had been taken since Zuma’s state of the nation address last month, when the president acknowledged the concerns of business and said he had asked Eskom to address how electricity price increases could be reduced, Hustler said.
While welcoming the reduction, Border-Kei Chamber of Business executive director Les Holbrook said if South Africa’s energy crisis had been left in the hands of the private sector it would already have been solved.
“If the private sector had been able to respond to the energy crisis – rather than all Eskom’s dithering and faffing as well as their laws, regulations and tariff increases – we would have fixed it a long time ago,” Holbrook said.
Additional reporting by Reuters
This is a shortened version of an article that first appeared in the print edition of Weekend Post on Saturday March 10, 2012.