Eskom needs to move away from its reliance on tariff increases and look to more creative ways of maximising revenue, says new group CEO Phakamani Hadebe. Otherwise, he warns, it will be sucked into a fatal utility death spiral. "We are not yet fully in that death spiral, but the signs are there that we will be going there." This is when utilities rely on higher tariffs for survival, which means fewer customers and fewer sales, requiring even higher tariffs. "It is created by utilities that do not adjust to changing times," Hadebe says. "That, unfortunately, includes us. We need to avoid a situation where the whole business relies on tariff increases." Eskom's latest request was for a 19.9% tariff increase. The National Energy Regulator of South Africa gave it 5.2% and told it to reduce its costs. Hadebe and his team have been working on a recovery plan which addresses how to maximise revenue and reduce costs. "These are the critical things," he says."It's no good hoping for the best...
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