Eskom told to back off
The announcement by the Treasury that municipalities cannot afford to pay Eskom more for electricity will be critical when the National Energy Regulator of SA today decides whether to approve an application by the power supplier for a tariff increase. The Sunday Times reported yesterday that the Treasury has said that a further tariff increase must be deferred to next year because municipalities had not budgeted for it.Municipal budgets include a 12.6% increase in electricity prices, to come into effect on Wednesday.But Eskom has asked the regulator for another 12.61% for the year from April 1 to March 2016.Eskom wants the increase to raise R10.5-billion to run its gas turbines and another R5.3-billion to purchase power from other generators.Eskom acting CEO Brian Molefe warned that the cost of power cuts to the economy would be six times more than the tariff hikes.Municipalities are struggling to pay Eskom for electricity. In April, Eskom announced plans to cut the power supply to the 20 municipalities most in arrears with electricity payments. Municipalities owe R3.8-billion of the R4.6-billion owed to Eskom.To make matters worse, municipalities are currently negotiating wage deals with unions that are likely to push their costs much higher.Energy expert Ted Blom said that, if the regulator approved the increase, municipalities would not be able to cater for it in their budgets."Either municipalities must have the money to pay the shortfall or the regulator must make another plan . but I don't know what that plan could be because the time limit for municipalities to introduce new electricity prices has expired."Blom said Eskom would not get the 12.61% increase it wanted, but perhaps 3.9%.Political analyst Daniel Silke said the Treasury's view on the ability of municipalities to cope with a higher tariff "has to take precedence in this matter. The regulator will have to consider something more manageable."The Energy Intensive User Group, made up of Eskom's biggest customers, has warned that the requested increase would bring the economy to its knees...
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