Eskom denies hikes plan
The average household will have to pay R2000 a year more for electricity if Eskom's latest plans to raise prices are approved.
Leaked documents published by Reuters last week showed the state-owned power company might increase its prices by between 14.6% and 19% a year in the next five years.
But Eskom has denied that it plans to do so. It said an announcement will be made in the next few weeks.
Eskom tariffs have increased by 24.8%, 25.2% and 16.1% over the past three years.
Mike Schussler, of Economists.co.za, said that "R1200 a month" was a good indication of what consumers now pay for electricity in a city like Johannesburg.
Dividing the total revenue from electricity sales by the number of consumers, Schussler has ''no doubt that each increase will cost households more than R2000 a year''.
Schussler assumed a tariff increase of about 15% but, if a carbon tax is added, as planned by the Treasury, Eskom might increase prices by as much as 19% a year.
"It is not only Eskom that is the problem," he said. "There is a knock-on effect by municipalities and a number of hidden costs that are not reflected in the general tariff increases."
Assuming an average salary of about R13000 a month, Schussler expects the tariff increases to hit consumer spending hard.
Large industrial electricity users are also concerned that Eskom's justification of its numbers is dubious.
''A healthy Eskom is critical to South Africa so, in principle, we understand that there have to be price increases,'' said Energy Intensive User Group spokesman Shaun Nel.
"But we want to understand how they arrive at those numbers.''
One of the assumptions that caught the group's eye was that electricity demand would grow by 2% in the coming year though it expanded by only 0.2% compared to the previous year.
The group started talking to Eskom last year when it thought a 25% increase would be excessive.
The Treasury's proposed carbon tax is also a concern. Such a tax will apply to most companies, including Eskom, resulting in higher prices, which will be passed on to consumers.
"In effect, companies will be taxed twice as they pay a carbon tax direct as well as higher electricity tariffs.''
Eskom faces a heavy debt burden due to the expansion of its generating capacity. It is expected to pay about R23-billion a year soon in interest alone as its debts grow.
According to the leaked documents, Eskom plans to rake in R1-trillion over the next five years.
''Capital expenditure should not be financed by consumers whose pockets are already stretched,'' said David Ross, the DA's spokesman on energy, yesterday.