SALGA commends Nersa for acting in public interest

The South African Local Government Association (SALGA) has commended the National Energy Regulator of South Africa (Nersa) for acting in the public interest by rejecting Eskom’s selection re-opener application for a 25% increase.

“The end-user tariffs proposed by Eskom was not only five times higher than inflation but was also unreasonable and not financially viable‚” the association said in a statement on Monday night.

SALGA had summited to NERSA’s public hearings last Tuesday that Eskom had failed to submit sufficient information to make a proper analysis upon which conclusions could be drawn – “which led to the rationale that Eskom was requesting customers to pay for its own operational inefficiencies – inefficiencies which Eskom acknowledged in the application”.

Had the Eskom application been granted‚ this would have meant that the electricity price would have increased from 2008 to date by a cumulative 166%‚ SALGA said‚ adding that the continued lack of certainty and predictability in the electricity prices remained a serious challenge for the economy of the country.

“SALGA reaffirms its support for Eskom’s viability as a national strategic asset but calls for the power utility to conduct its business consistent with the government’s economic objectives. There is a need to explore long term solutions and a possible re-look at Eskom cost structure‚ including its coal contracts.

Municipalities are already confronted with challenges of high non-payment for electricity services as well as electricity theft which amounts to billions of Rand losses in revenue‚ these among others‚ add to many underlying systematic and structural challenges in local government.

“SALGA reiterates that Eskom’s application was undesirable and would have had many unintended consequences if it was granted in its form and this would have meant that local government was going to be forced to absorb the impact within the approved municipal operating budget – thereby subsequently having to pass additional increase on to the consumer. This would have had serious implications for the financial viability and sustainability of municipalities.

“SALGA would like to see further funding options explored by Eskom towards building a financially viable Eskom.

“SALGA and Eskom’s signed a Memorandum of Understanding in October 2014 and it is against this backdrop that SALGA will continue to address the electricity industry and operational challenges that the two organisations have jointly identified.

The financial constraints of Eskom and their sustainability remains a key priority for SALGA and local government in general‚” the association stated.

RDM News Wire.