Numsa says Eskom is punishing the poor, pleads with Nersa on increase

2013-01-18 00:00

THE National Union of Metalworkers of SA (Numsa) lambasted Eskom yesterday, saying it was punishing the poor.

Addressing about 200 delegates from across civil society in Durban at the National Energy Regulator of SA (Nersa) hearing on Eskom’s application for a 16% tariff increase every year for five years, union president Cedric Gina said: “Eskom is not a policy decision maker, and the fact that funding for Eskom is done through tax is shocking.”

Gina said the utility was obsessed with trying to fund a R1,9 trillion revenue requirement to cover primary energy costs, operating costs, depreciation and a return on assets. In addition, Nersa had granted Eskom an increase of 24,8% in 2010.

With this figure in mind, he pleaded with the regulator to scrutinise the section that dealt with returns on Eskom’s tariff applications and make a judgment on whether the company’s equity component of R46 billion was justifiable.

“About 14 000 [mining] jobs may already be lost, which is a concern. Nersa shouldn’t be irresponsible to add to that situation in the country. Nersa must grant Eskom tariff increases that match the inflation rate and establish a long-term electricity price path model,” he said.

He criticised Eskom’s head of regulatory and legal affairs, Mohamed Adam, for receiving a bonus and for making Eskom attractive to private investors.

He accused Eskom of slacking when it came to routine maintenance, resulting in blackouts.

In addition, he said, Eskom was engaged in buybacks from some companies he would not name, claiming that the utility gave money to businesses for closing their furnaces, then retrenched workers to try and please shareholders.

Eskom spokesperson Hillary Joffe said the company’s economic model showed that it was better to fund investment in electricity through tariffs.

She rejected the notion that it was Eskom’s fault that blackouts occurred in 2008, but said it was a countrywide problem. “SA did not start in time to build new capacity. It is not just an Eskom issue, but an issue of policy and uncertainty.”

Another problem highlighted by Joffe was that many major companies such as manufacturers were supplied by municipalities, who marked up their prices.

Plus, she said, three percent of the total tariff increase was to fund independent power producers generating wind and solar energy. “This comes at a cost and we need to move to cleaner energy.”

Nersa spokesperson Charles Hlebela said the organisation would solicit more comments from the public and make a decision by the end of February.

“Nersa is there to ensure that the energy industry is viable and sustainable in order to grow the economy.”

He pointed out that the hearings were not only based on public views, but that the regulator would also conduct a thorough analysis when it was time to make a decision.

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