SA electricity cheap, income a problem

2012-06-11 14:35
An electricity pylon is pictured. (Herman Verwey, Beeld)

An electricity pylon is pictured. (Herman Verwey, Beeld)

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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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Read more on:    greenpeace  |  wwf  |  eskom  |  energy  |  environment

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