Newsmaker: ‘I’ll be damned if the lights go out’

2012-10-27 15:46

Consumers blow a fuse after Eskom CEO proposes a 16% a year hike in electricity prices for next five years

For Brian Dames, every day at work brings one phrase to mind: damned if you do, and damned if you don’t.

Dames, as chief executive of Eskom, knows his job means he’ll never be a contender for the title of Mr Popularity.

But it doesn’t bother him because he has a job to do.

This week, Dames was damned by most South Africans when the power giant announced that consumers could expect to pay 16% more for electricity each year for the next five years.

It’s now up to the National Energy Regulator of SA (Nersa) to decide in February whether to approve or reject Eskom’s unpopular request.

The man at the helm isn’t losing sleep, even though anger is growing among ordinary South Africans about rising electricity prices.

“There is nothing we can do. I need to keep the lights on,” Dames says matter-of-factly.

“Somebody has got to do it eventually. It just so happens that it is me.

“I will be damned if the lights go out in future. I will be criticised for not having planned. But I’m also being damned now for trying to plan properly for the future.”

His planning, and the plans of those who occupied the hot seat before him, has cost South Africans a lot of money.

During the current multiyear price determination, which started in 2009 and ends on March 31 next year, Nersa controversially sanctioned above-inflation tariff increases amounting to 25%.

Eskom’s latest request will come on top of that 25%.

The proposed increase, says Dames, is necessary because of four factors: an increase in coal prices, operating costs, the depreciation of assets and the need to raise money to repay loans with interest.

“The cost of coal is rising above inflation,” Dames says.

“Of the 16%, 13% will be used to replace power plants and assets when they reach their life span. The remaining 3% will be used to buy from independent power producers.

“We need to cover our operating costs, which rise by 8% every year. We also need to pay back our obligations and interest. All these make up the need for a 16% increase per year.”

Coal is the biggest driver of costs, he says.

“Over the last three years, coal prices went up by 18% while we had assumed they would only rise by 10%.

The biggest cost driver that must remain under control is coal.”

Coal is also the most controversial part of Eskom’s business, according to environmentalists.

This week, groundWork, Earthlife Africa JHB and Greenpeace Africa declared that they were putting the power giant “under new management”.

“Eskom needs new management because it continues to fail the people of this country, prioritising coal power to the exclusion of every other option,” the organisations said in a statement this week.

“Coal-fired power stations damage people’s health, use staggering amounts of scarce water, accelerate climate change and do not deliver affordable, accessible electricity to all South Africans.”

Their protest at Eskom’s Megawatt Park headquarters in Joburg resulted in 14 activists being arrested and charged with trespassing.

The activists paid admission of guilt fines, according to a statement issued by Greenpeace.

Dames, though, dismisses suggestions that Eskom’s plans harm the poor.

“The average increase in real terms for the poor will be an additional 9.8c/kWh (kilowatt-hour) in the tariff they are currently paying.

“It’s a single-digit increase. We have tried to help the poor. For the high-end users, the average increase will be between 8% and 9%.”

Electricity in South Africa, he says, was not previously priced correctly, which led to a lot of waste.

“If I knew I was paying close to nothing for my water, I wouldn’t mind leaving the tap running. Now that we are starting to price correctly, we are seeing a huge improvement in efficiencies.”

Another criticism that is often levelled at Dames and his team centres on their massive salary packages and annual bonuses.

Dames reportedly earns more than R400 000 a month.

He believes the recently mooted idea of a salary hike freeze for executives is not a good idea.

“We who work at Eskom run one of the biggest electricity producers in the world.

“We have a management team that is very committed and we have to be paid competitive salaries.”

Although he does receive bonuses, his own salary, Dames says, has not risen since he took over as chief executive halfway through 2010.

Your views

Moses Ndlovu (68)
Moses Ndlovu is a pensioner.

His electricity bill is currently R100 more than the R1 200 pension grant he receives each month.

“If Eskom’s proposed 16% increase is approved, I honestly don’t know what we will do,” he said.

Ndlovu shares his three-bedroom home in KwaMashu’s C Section with his wife and two daughters.

Both his girls have two children, who live with them.

A look at the large face-brick house with aluminium windows and doors, and a satellite dish perched on top lead some to believe these are the Joneses with whom everybody in the township is trying to keep up with.

But high costs leave them out of pocket.

“I went and bought a solar geyser and disconnected the pipes from the house geyser to try to bring down costs. We use our oven as a cupboard. We only turn on lights in rooms as they are occupied,” he says.

“Honestly, I can’t say I have seen any difference. It is as if you are charged a standard rate, even if you use less electricity.”

A generator is next on his plans to try to cut costs. He also runs tuck shops to make extra cash. – Sphumelele Mngoma

Riana Roux (33)
Joburg resident Riana Roux says if the latest Eskom tariff hike goes ahead, she’ll probably have to use her oven less.

Roux says the electricity bill for her four-bedroom house in Florida, west of Johannesburg, is about R1 600 every month.

The 33-year-old, who lives with her mother, says the proposed electricity hike will affect her in a big way.

Electricity’s already too expensive, the mother of four told City Press, and another increase would hit consumers too hard.

“It will affect us, everybody.”

Roux says she mostly uses electricity for baking and cooking. She’s trying to decide what she’ll cut back on if the tariffs go through. “I’m not sure, but maybe I will have to bake less,” she says.– Loyiso Sidimba

Amon Ngwamba (68)
Amon Ngwamba spends a little over a quarter of his state pension on electricity each month.

Ngwamba, his wife and three school-going children live in a four-roomed house in Mattaffin, a farm dwellers’ settlement 5km outside Nelspruit.

The family’s sole income is his R1 200 monthly old age grant. He spends 30% of that, or R350 a month, on electricity.

Ngwamba shakes his head in disbelief on hearing that Eskom intends to raise prices by 16% a year for the next five years.

“Sixteen percent?” he asks, widening his eyes through his glasses. “I thought they were saying 6%. As it is now, I can’t cope.”

Ngwamba has had to give up other things just to ensure that his R350 worth of power, loaded on to his prepaid electricity meter, lasts the month.

“Electricity is very expensive at current prices.

“If we finish our electricity two weeks before the month ends, we have no plan until I get another payment,” he says. “I personally have not seen the free electricity government promised.” – Sizwe sama Yende


Thetjeng Motlatjo (50)
Thetjeng Motlatjo, the Congress of the People’s office manager

in Polokwane, is waging a war against high electricity bills.

Motlatjo and his wife, who share a home with their three children, earn a combined income of R43 000 after deductions.

Their household expenses include about R5 000 on groceries, R3 000 for school fees, R4 800 on medical aid and more than R2 000 for electricity, water and rates.

But since he decided to switch to gas for cooking, his costs have plummeted to R1 000.

Now he plans to cut his bill even further by installing a solar geyser worth R18 000 next year.

“Any increase in electricity prices will have a devastating effect on both the poor and middle-class people like myself,” he said.

Motlatjo said he decided to switch to gas when he realised that his electricity bill was spiralling out of control. – Sipho Masondo



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