Electricity price hike gets a thumbs down

There has been an almost unanimous outcry to the proposed electricity increase by Eskom, with calls to object by various ratepayers’ groups.

Chairman of the Fish Hoek Valley Residents’ and Ratepayers’ Association (FHVRRA), Brian Youngblood, said residents could only object to the National Energy Regulator (NERS) about the Eskom application for a 19.9% increase. “The amount of 27% as total increase cost, is the best guess from ours and the Far South Peninsula Community Forum’s (FSPCF) environmental groups, based upon previous Eskom rate hikes,” he said.

“The City always charges more than Eskom to pay for their infrastructure and staff.”

The FHVRRA has shared their objections, saying that, in terms of Section 16 of the Electricity Regulation Act of 2006, the setting of prices, charges, tariffs and the regulation of revenues and as stated in Government Gazette #31741 of 19 December 2008, Section 2.1 General Tariff Principles, for customers, the tariff objective was meant to be affordable.

“Price levels should assume an efficient and prudent utility, in other words, prices should be based on least cost options and exclude inefficiencies. Tariffs should be equitable and fair. Prices should be predictable and fair, preventing price shocks. Prices should be transparent with no hidden costs,” Mr Youngblood quoted.

He said that any energy commodity necessity that increased above the consumer price index (CPI) was not affordable.

“Many of our members are either pensioners or new families with small children. The annual increases in pensions and negotiations of salaries have difficulties pegging to CPI as a minimum, much less an exorbitant increase of 19.9%,” he said.

Mr Yougblood pointed out that other energy costs were not escalating by 19.9%. “Oil and its derivative products are an international energy commodity, which has not increased by 19.9% even with our wildly fluctuating currency, but especially not in constant US dollar terms. Disregarding briefly the recent 4.9% increase, these prices have been dropping since 2014,” he said.

He said this tariff application could be considered unpredictable and would come as a shock to many. “Price shocks are normally attributed to a lack of supply, but Eskom has spare capacity. Eskom has connected two 794MW units from the Medupi power station, one 800MW unit from the Kusile power station and all four 332MW units from the Ingula pumped storage scheme to the grid by the end of 2016. Since January 2017, this spare capacity stood at 27.1% of demand. Eskom should lower the prices to increase consumption,” he said.

The FHVRRA’s recommendation is that Eskom’s 19.9% average increase in electricity tariff application be denied.

They further believe that Eskom’s prices should be lowered. Tony Trimmel, chairman of the Kalk Bay/St James Residents’ and Ratepayers’ Association, said Eskom’s 2018/19 proposed hike in electricity tariffs would have a “devastating” effect on municipal customers, who could effectively be paying up to 28% or more if the increase were approved.

“Electricity consumers are currently still feeling the pinch after this year’s increases which came into effect this past July. Many lost out on the subsidised 25 units of electricity, coupled to the increase in rates and losing out on the free 6 k/litre water units,” he said.

He said people on fixed incomes and grant recipients were the most vulnerable members of society who needed to be informed via their councillors and various media platforms when the 2018/19 tariff determination, including public participation, would take place, so that they could actively ensure that their concerns were heard during this process. “It is extremely difficult to advise on electricity saving tips to pensioners and single income households, who barely have enough to survive, on a month to month basis,” he said.

He suggested that people support civic campaigners and NGOs when they take on the might of Eskom. “We cannot keep on paying for dysfunctional state-owned enterprises,” he said.

Fish Hoek pensioner Rosemary Milbank said: “I use a gas bottle for cooking. It costs me R80 a month. To save electricity I only have one light on and I have turned my geyser right down but the cost has doubled. I always buy R150 a month but last month cost me R300. It’s scary,” she said.

Mary Turok, who has worked extensively with older people through the Western Cape Older People’s Forum, said the new rates seemed a lot fairer than the present rates.

“I was appalled to know that people buying R50 worth of electricity would only get a reduced rate for the first purchase of the month, whereas people like myself, who buy
R1 000 at a time get around 200 extra units with the first purchase. Yes, of course higher fees hurt, but I agree that limits should be set for ‘domestic customers’ , though I’m not clear about who qualifies,” Ms Turok said.

“The limit of 600 units is tight but let’s not forget we are living in a country where 90% of the population are poor.
It’s about time we, the affluent, dug deeper into our pockets.” Ward councillor Felicity Purchase said the City couldn’t pass on the increase until the next budget cycle.

“However, we too would oppose it. We have opposed their increases in the past. In fact, everyone should oppose the increase,” she said.

The City’s mayoral committee member for finance, Johan van der Merwe said that Nersa will assess whether the price increase can be justified or not.

With regards the City’s role, Mr Van der Merwe said: “The City of Cape Town works consistently to increase resource efficiency while maintaining the service levels our customers expect of us. If the energy costs charged by Eskom are increased significantly, this cost will unfortunately be passed through to our customers. Purchases from Eskom are a major component of the City’s budget and need to be recovered,” he said.

Residents are advised that once you buy more than a certain amount for the month, electricity becomes more expensive for the rest of that month.
“As such, residents are advised to only purchase the amount of electricity that they need for the month, to avoid buying too much at the more expensive rate,” he explained.
“The level at which electricity becomes more expensive is 350 units for Lifeline customers and 600 units for domestic customers,” he said.