Outcry over electricity price hike as Eskom apologises for constant long power cuts

The National Employers' Association of South Africa (Neasa) doesn’t believe Eskom’s electricity price hike will mitigate the power cuts crisis as additional income will continue to flow to corrupt individuals and incompetent municipalities.

Eskom has apologised for the severe power cuts and said it appreciates the tough decision made by the National Energy Regulator of South Africa (Nersa) for the financial year 2024 and 2025 revenue determinations.

Trade union federation Cosatu called Nersa’s approval of the increase in tariffs “insensitive” and “careless”.

On Thursday Nersa approved a revenue application of R318bn for Eskom for the 2023/2024 financial year and R352bn for 2024/2025.

Eskom’s application was for R351bn for 2023/2024 and R381bn for 2024/2025.

The increase for 2023/2024 translated to 173.08c per kWh and a percentage increase of 18.65%. The increase for 2024/2025 translated to 195c per kWh and 12.74%.

“This will be a devastating blow to workers and businesses struggling to survive in an economy still reeling from Covid-19 lockdowns and rampant inflation,” said Cosatu spokesperson Sizwe Pamla.

He said while the increase is less than the 32% hike Eskom requested, it will be devastating for the unemployed and those dealing with wage stagnation. It will be a further burden for companies struggling to keep afloat because of a stagnant economy.

“The continuous above-inflation increases Eskom has received since 2006 are nothing more than the legalised robbery of consumers. These increases only serve to pickpocket workers of their meagre wages, suffocate businesses and deny the economy the chance to reduce unemployment,” he said.

Cosatu reiterated its call for the government to relieve Eskom of at least two-thirds of its debt burden and allocate additional funding for it to purchase diesel to help reduce load-shedding in the 2023/24 budget due to be tabled in parliament next month.

“The department of mineral resources & energy needs to grant Eskom the diesel import licence it has long been calling for, which will help it to make significant savings.”

Pamla said they were worried law enforcement agencies are struggling to prosecute those who have stolen billions from the power utility, adding that if the government did not address the root causes of Eskom’s crises “we will see Eskom return to Nersa by June asking for additional double-digit tariff hikes”.

Neasa CEO Gerhard Papenfus said there are two responses to the tariff hike:

• an attitude of resignation, which is to accept the utility is in trouble and there is nothing that can be done about it but pay the bills; or
• righteous discontent — an attitude of asking how we got here and demanding a way forward that will drastically address the crisis.

“Although South Africa is not a failed state yet, the state’s trajectory is clearly in that direction,” he said.

“Government's failure to sustain the essential elements of a functioning state, such as sound leadership which inspires respect, integrity in governance, safety and security and maintaining of infrastructure, is most visible in the collapse of Eskom.”

He said the overstaffed and incompetent utility, stripped financially through fraud and corruption and devoid of skills and loyalty through cadre deployment and race-based employment policies, has been allowed to increase its price by 18.65%.

“This is a huge increase which will hurt consumers, those few who actually pay their electricity bills,” he said.

Papenfus said South Africans wanted to know how things are going to improve, even with this increase, if the policies, corruption and inefficiency remain.

He said consumers are left without any option but to pay more, and it is unlikely they will receive anything in return.

“We refuse to accept an increase is a solution to Eskom’s problems, as additional income will still flow to corrupt individuals and incompetent municipalities who refuse to settle their bills with Eskom.”

Eskom said on Friday it apologises for the severe extent of load-shedding and understood the impact on individuals and businesses while it appreciates Nersa’s tough decision.

It said it recognises the pressures this determination will place on consumers.

“The minimising of load-shedding is the highest priority for Eskom, and continuous focus at all levels in the organisation is being given,” said the beleaguered utility.   

Once Nersa makes a decision on the restructuring of tariffs, as submitted during August 2020 and 2022, these decisions will ensure Eskom can apply the tariff adjustments to its customers from April 1. 

In July 2022 the high court ordered Nersa to undertake the necessary regulatory steps to assess, consult and make a determination on Eskom’s financial year 2024 and 2025 multiyear price determination application.

Nersa was granted an extension to make the decision by January 12, since it required further time.

“Eskom notes the decision by Nersa. This decision will positively contribute from a financial and sustainability point of view. The revenue determination of R319nn and R352nn for the financial years 2024/5 will allow a further migration towards a price level that reflects the efficient cost of producing electricity,” said Eskom CFO Calib Cassim.

The utility said it is evident Eskom and Nersa are aligned that every effort needs to be made to improve the energy availability factor at power stations. The shortage in capacity due to both Eskom's performance and delays in the independent power producers projects needs to be addressed.

“It is noted Nersa has reconsidered capital related costs when compared to the previous decision. This significantly contributes to allowing for Eskom to recover costs related to debt commitments.    

“Eskom awaits the reasons for the decision for the determination made by Nersa that will provide further insights on how the revenue determinations for financial year 2024 and 2025 were derived.”

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