News24

SA electricity cheap, income a problem

2012-06-11 14:35

Cape Town - Electricity pricing in South Africa is cheap, compared to other countries, but household income is not growing to keep pace with price increases, environmentalists have said.

"The problem is not necessarily the cost of electricity because we have to look at the figures: Relatively to other countries, we are either on par or slightly cheaper. The problem is that people's income is not growing," Saliem Fakir WWF head of the Living Planet Unit told News24.

He said that policies in the past had contributed to an attitude that electricity in South Africa was cheap, spurring industry to exploit what was a surplus resource.

"There has been a history where in the past, we had surplus electricity and we signed contracts that were cheap," Fakir said.

In SA, domestic users account for around 17% of consumption, while industry takes up 37.7% and mining 15%, according to the government gazette on electricity pricing policy of 2008.

Industry tariffs

Some have argued that domestic tariffs are subsidising industry and Greenpeace has challenged Eskom to abandon plans for the Medupi and Kusile power plants.

The organisation on Friday condemned the boiler pressure test at the Medupi power station scheduled to come online in 2013.

"Medupi may be about to start delivering electricity into the South African grid, but this will come at a huge social, economic and environmental cost, which leaves little to celebrate," Greenpeace said.

The WWF, though, conceded that industry players gave the utility the ability to finance the cost of new power generation capacity, but was cautious on the question of industry tariffs.

"If we didn't have bulk buyers, the ability for Eskom to afford to build new generation on the basis of residential users would be very limited because they wouldn't be able to cover all the needs of the economy.

"The question of whether they're subsidised are not: I really can't answer because it really depends on whether we're presented with the figures," said Fakir.

Eskom CEO Brian Dames said that the utility was on an intensive programme to conduct maintenance at its power stations to eliminate a backlog by the end of 2013.

As winter takes hold in SA and electricity supply comes under pressure, the utility has ensured that it has agreements with industry to buy back electricity capacity if required so that it can prevent the rolling blackouts experienced in 2008.

"There is a programme with industry: Eskom has a buy back policy as I understand it where it's negotiated an agreement [with them] First they have to make an effort to reduce their consumption by 10% and if it needs power, and some of the players are not going to use it, Eskom has the right to buy back some of the power," Fakir said.


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Comments
  • downwiththeanc - 2012-06-11 14:44

    and our salaries are poor compared to other 1st world countries

      Michaele - 2012-06-11 14:51

      Yes, I agree with you, our electricity is cheaper but not proportional to wages earned. But the work ethic is lower, too many strikes, stay aways and go slows. Increased wages should be directly proportional to productivity improvement.

      Lacrimose - 2012-06-11 15:01

      Depends where you work. Many in the private sector work long hours (with unpaid o/time) and only get 4-6% increase p.a. if they are lucky. Conversely *some* in the public sector have an effective 4hr day, with subsidised housing, transport, pension, medical etc, but are guaranteed 10-15% p.a.

      goyougoodthing - 2012-06-11 15:28

      Saliem's logic fails on a monumental level. A sandwich from Pret-a-mange in London is about 11 pounds, that's about R130. Logically then, all sandwiches in SA should cost R100, which would be fine, it's just that the salary doesn't match the price... wtf kind of logic is that???

      goyougoodthing - 2012-06-11 15:33

      "If we didn't have bulk buyers we would not be able to afford new powerstations" Um, thought: if we didn't have bulk buyers using 80% of the power at 10% of the price we wouldn't need new powerstations?????

      downwiththeanc - 2012-06-11 15:35

      And still the CEO's and senior executives earn salaries of a few million with loads of other perks and benefits. They tell us to decrease our consumption and then charge us more too. What a bunch of plonkers

      Ray - 2012-06-11 15:35

      If domestic users at 17%.industry 38%,mining 15%,where does the other 30% go? Is it stolen?

      downwiththeanc - 2012-06-11 15:37

      In the town i live the municipality also want to increase rates by 15 % when the national guideline is 6 % ( and they increased it only a few years ago too ) ...everyone is **&* milking the consumer for as much as they can get...and the poor just get poorer - something seriously wrong. Employers just getting richer and their employees just getting poorer.

      downwiththeanc - 2012-06-11 19:54

      all i can say is down with the ANC. We wouldnt have had these huge increases if they planned properly - they were warned long ago about power shortages- AGAIN- everything can be blamed on the ANC

      grant.hide - 2012-06-12 09:25

      Nope, it goes over our borders...

      Boer - 2012-06-19 21:28

      Your electricity is super expensive man dont con yourself. Where does this guy come from that wrote this piece. ?

  • wesley.bischoff - 2012-06-11 14:46

    Exactly... the price of everything goes up annually, yet the remuneration increase is only goes up slightly. How do they expect people to stay out of debt and save, when 99% of the populations expenses (excl. luxuries) are higher than their incomes?

  • djbakes - 2012-06-11 14:56

    Let's compare apples with apples. I'd like to see the electricity prices in countries with the same per capita earnings as SA.

  • joy.termorshuizen - 2012-06-11 15:02

    The problem is that a LARGE percentage of the electrity output is STOLEN either by illegal installations, meter gypoing or non payment of accounts. If everybody actaully paid for whatthey used it would be cheaper still.

      Ray - 2012-06-11 15:37

      Joy,just saw this-see my question above,we seem to be on the same wavelenght.

      Hplar - 2012-06-12 09:37

      A senior Eskom official told us a few months ago around a braai, after a few beers, that by getting rid of illegal electricity connections the power supply capacity problems will be resolved. They will still need to built the stations, but the immediate threat is removed and it will cost Billions less to do. BUT, it is soooo much easier to have the soft targets, namely the average law abiding citizen pay, than going in and ripping out the illegal connections.

  • Loo - 2012-06-11 15:06

    Our electricity CHEAP ???? Obviously they're talking of rate scale 1 of the 3. Then another thing, Eskom. keep on telling us how the domestic market only forms 17% of the "total" bill. Yet , ,forget to mention that 70-80% of the "17%" are collected from less than 10% of the population taking "value" in consideration. So what's my point ... Industry get HUGE discounts and electricity expense is a tax deductable, yet the domestic user normally on PAYE get nailed to the floor ONCE again. These figures Mr. Eskom mean nothing. You know and we know, it can be manipulated anyway you like. Fact remains ,, you are bankrupting us.

      Erich - 2012-06-11 15:20

      This is a lot of bull dust. Cheap electricity only applies to township residents where you can pay uneconomical rates, steal it via your neighbour or just ignore the bill should you be so lucky to get a bill. The rest pay inflated rates.

  • djbakes - 2012-06-11 15:16

    After some research here ---> http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita and here ---> http://en.wikipedia.org/wiki/Electricity_pricing. Countries close to our per capita income and cost in US cents per kW: Peru 10.44 Brasil 34.18 Thailand 4.46 Jamaica 7.35 Most countries close to us don't have costings in Wiki but the ones I listed were all 2011 or 2012 prices while they only had 2008 prices for SA which was 5.37 Estimated cost per kW in SA for today is 11.5 by my rough calculations. So we seem to be have no case for complaint. I would like to see more comparisons though!

      Ze Don - 2012-06-11 15:41

      You can probably find more up to date information on the CIA website.

      Annelise - 2012-06-11 15:45

      We pay at our factory in Somerset West (near Cape Town) R1-68 per/kwh, how is that cheap? According to Eskom we as South Africans are only paying 0,70c per kwh. Can someone please explain the discrepancy to me?

      Ze Don - 2012-06-11 15:53

      Annelise, someone has to pay for all the free electricity supplied to the poor. If I recall correctly the fixed rate for lights and water for poor households in Pretoria is R65 per month!

      Aaron - 2012-06-11 17:51

      djbakes, your figures are way off. On my latest prepaid topup R1000 bought 797 units which equates to about 15 US cents per KWh and at the end of the month this will go up by approx 15% which will make it about 17 US cents per KWh. This puts SA firmly in the top 30 most expensive countries in the world, so Eskom and Brian Dames are frankly talking complete garbage. Besides which, to say that "the cost of something is not a problem, it's just your income that's too low" has to be the most nonsensical argument I have ever heard because you can apply it to everything. By this reasoning, a Ferrari isn't really expensive, it's just that my income is a bit of a problem when it comes to affording one.

  • Cassandra Eileen Olivier - 2012-06-11 15:17

    If our electricity is so cheap then why is the ANC slowly selling Eskom to the Chinese

  • almeleh - 2012-06-11 15:42

    Right. BMWs are cheap, it's my income that's too low.

  • Hans - 2012-06-11 15:52

    This is being happening all the years along - we are being taxed at higher level year on year - we households compelled by law to pay certain fees and minimum wages yet we not allowed any tax deduction - isnt it high time that we also shouting and stampeding at bra Pravins pallace as emails doesn help!

  • rory.short1 - 2012-06-11 15:53

    Why do we still have a monopoly in the generation and distribution of electricity? Generation should be split from bulk distribution and generation should then be opened up to anyone who wants to do it including Eskom. Eskom should not be involved in the bulk distribution which should be the responsibility of a separate entity covering the whole country. Municipalities, just as now, should handle retail distribution to consumers. Every effort and incentive should be made to encourage generators, which can range from households with solar panels to industrial size generators, to use renewable energy in generating activities NOT fossil fuels which are killing the planet.

  • BulletProof - 2012-06-11 15:58

    Well they increase 100% on electricity price and salaries increase under 10%,who says electricity is cheap?

  • jennifer.tselentis - 2012-06-11 16:07

    There fore QED South African electricity is inefficient and expensive...

  • jennifer.tselentis - 2012-06-11 16:09

    Therefore Eskom system, and network is inefficent and expensive.

  • Kaizer - 2012-06-11 16:17

    The working and paying customers must stop subsidising the non working \ non paying section of this here country.

  • WG - 2012-06-11 16:28

    Tax abuse by the corrupt state includes huge living costs enforced with profits and tax of state directed and uncompetitive business. The unknown total tax on the masses must be far more than what they earn. That forces people into excessive debt even for basic living costs and worsens poverty.

  • leonard.olley.7 - 2012-06-11 16:31

    Why do we always compare with other countries. We live here. I think in Peru or one of the South American countries the only export oil AFTER they have provided for the inhabitants. What Im trying to say is its time SA looked after its own citizens and not worry about our costs being on par with other countries. This is a rocky road to travel because we could start to expect the other countries perks as well.

  • renesongs - 2012-06-11 17:03

    Saliem Fakir go read some economics before spouting such ignorant rhetoric. Here let me give you a Noddy's guide to economics. If a consumer commodity becomes less affordable relative to average income we say it is becoming more expensive not cheaper >:(

  • RoryKlein - 2012-06-11 17:27

    I have a problem paying a high tariff for electricity than that of the same electricity that is supplied out of South Africa to neighbouring countries. I have a problem that I prepay for electricity and then get load shedding and get told I must conserve, because they are unable to meet the quota. I have a problem when CEO's and other shareholders get paid a huge performance bonus and then ask for government’s assistance to help fund there operation with Tax Payers money. I have a problem that they increase the tariffs and still have the nerve to tell me that I must conserve on my usage even though I have prepaid them for what I will be using, while there are multitude of households that are in arrears with their accounts and municipalities. I have a problem when I drive down a road and it is raining or dark and the street lights are off, even though each month taxes are taken from my salary. I couldn't care less if the electricity is more expensive in other countries. I live here in South Africa and I earn South African rands. Why is this a problem now and not a problem before 1994? I tell you why.... because nothing is been spent on maintaining and improving our countries infrastructure in the past 20 years.

  • RoryKlein - 2012-06-11 17:48

    I have a problem paying a high tariff for electricity than that of the same electricity that is supplied out of South Africa to neighbouring countries. I have a problem that I prepay for electricity and then get load shedding and get told I must conserve, because they are unable to meet the quota. I have a problem when CEO's and other shareholders get paid a huge performance bonus and then ask for government’s assistance to help fund there operation with Tax Payers money. I have a problem that they increase the tariffs and still have the nerve to tell me that I must conserve on my usage even though I have prepaid them for what I will be using, while there are multitude of households that are in arrears with their accounts and municipalities. I have a problem when I drive down a road and it is raining or dark and the street lights are off, even though each month taxes are taken from my salary. I couldn't care less if the electricity is more expensive in other countries. I live here in South Africa and I earn South African rands. Why is this a problem now and not a problem before 1994? I tell you why.... because nothing is been spent on maintaining and improving our countries infrastructure in the past 20 years.

  • vishalmohanlal - 2012-06-11 21:04

    http://www.iol.co.za/scitech/science/environment/germany-sets-new-solar-power-record-1.1305893#.T9ZA31Lcxn4

  • Julie - 2012-06-12 04:51

    Correct me if I'm wrong, but didn't I read somewhere that we are selling electricity to Moçambique and Zimbabwe at much cheaper rates than we're paying here? Then what is happening to Duvha power station after a R3-billion accident through negligence when a worker - who was supposed to stop the turbine test at a certain speed, didn't have his hand on the button, (apparently he wasn't even at his post from what I understand)causing this disaster? That would never have happened if this station (and other stations) were still being run by EXPERIENCED AND CAPABLE staff that have been laid off to make way for AA?????? But getting back to providing our neighbouring states with (cheaper) electricity - once again the bled-white S.A. taxpayer has to fork out for these "freaking useless new South Africans..."

  • Julie - 2012-06-12 05:04

    Further to my comments on the damage at Duvha power station earlier - here's the story - read, and be 'gob-stopped' at the sheer incompetence: http://nolstuijt.wordpress.com/2011/11/27/duvha-powerstation-turbine-blowup-sa/

  • edward.herbst - 2012-06-12 07:32

    soon we will be like Uganda who sells 90% of its electricity across the border and supplies poor service to its own country .whilst the fat cats skim every bit of cream off the top...

  • Hplar - 2012-06-12 09:21

    Government, Eskom, Economists, Statisticians, Brian Dames, and every-one else that like to “bench-mark” us against other countries, STOP IT! This is not Europe, or America or some other properly developed, productive first world country, this is Africa. You only use this comparisons to see how much more you can TAX us, how much more you can milk us and burden us and take our hard earned money. If you were privatized, 50% of your workforce will be without jobs, because they simply do not work and are full of excuses. I know, I see it on a daily basis.

  • winifred.watson.9 - 2012-07-10 09:24

    If Eskom can afford these costly parties for staff then they can something good for the old people of this country. Why cant people aged from 65 up not get the same benefits as those people in the rural areas. Buy R50-00 get R50-00 free. South Africa does absolutely nothing for these poor people whose savings have been ravished by bad interest rates and increased prices, and these poor people cant even get a job because of their age. Todays youth make a big noise they have lots of representation, even in government and the unions. Old people dont even have a voice, nobody represents us.

  • Bantsijang - 2012-08-09 21:12

    "The question of whether they're subsidised are not: I really can't answer because it really depends on whether we're presented with the figures," said Fakir.

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