Sol Plaatje municipality denies 'hefty' winter power markups, says Eskom's rates are higher

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Eskom CEO André de Ruyter.
Eskom CEO André de Ruyter.
Photo: Gallo Images/Rapport/Deon Raath
  • A Northern Cape municipality says remarks by Eskom's CEO about how much it charges for power risk "agitating" communities into shutting it down. 
  • De Ruyter said he could understand public frustrations about the cost of electricity given "hefty" municipal markups. 
  • Sol Plaatje municipality has denied charging markups of up to 121%, and has accused Eskom of having the more expensive power. 

Sol Plaatje municipality in the Northern Cape says it has written a letter of complaint to SA's electricity regulator after Eskom CEO André de Ruyter singled it out for charging "hefty" winter increases.

The municipality is not only denying the mark-up was as large as De Ruyter claimed, but has gone on the offensive to accuse Eskom of charging higher rates to come customers it supplies directly. 

De Ruyter made the comments in an interview with political analyst David Ansara of the Centre For Risk Analysis in late May. 

Speaking about public unhappiness with the cost of electricity, De Ruyter said some municipalities added a "very hefty markup" to the tariffs that Eskom charged them.

"In the case of Sol Plaatje municipality, which is Kimberly, [there is] as much as a 121% markup. So when people complain about the cost of electricity – yes in some cases it is true."

But the municipality has denied it is charging a markup of 121%, saying the true amount was 68%. 

"The comments of Mr De Ruyter are factually incorrect and unfortunate as they erode the commercial value of the electricity business in Kimberley, they cause confusion and agitate customers," the municipality said.

The municipality's council has also taken a decision to ask the National Energy Regulator of South Africa (Nersa), which has to approve all tariffs, for help. 

"Nersa must assist council to deal with the CEO of Eskom, Mr De Ruyter, in terms of recent statements that he made on electricity increases," states the resolution, which doesn't say how it expects the regulator to do this. 

When asked to confirm Sol Plaatje's calculations, Nersa referred Fin24 to its website, saying tariff rates were available there. 

Calculations 

When Fin24 approached Eskom to explain how it calculated the 121% figure, the utility said it calculates markups by comparing the tariffs it is allowed to charge municipalities with the tariffs they pass on to customers. 

It said it is allowed to charge municipalities R1.4648 per kilowatt-hour. The municipality, meanwhile, charges certain commercial users a tariff of up to R3.0203 per kilowatt-hour in winter, when demand is highest.  (The rate of R3.0203 per kWh does not apply to residential customers.)

EXCLUSIVE | Eskom's De Ruyter threatened to quit three months into the job: 'Either he goes, or I go'

The percentage change between the two figures is 106%. While this is not the 121% referenced by Eskom, it is in the same ballpark. 

Sol Plaatje, meanwhile, has disputed Eskom's figures. It said its purchase cost for Eskom during the 2020/21 winter months was R1.7982 per kWh. 

"This makes the markup of the R3.0203/kWh equal to 68%," states a document prepared by a consultant. 

But the municipality is not leaving it there. It has now accused Eskom of charging tariffs way above R3.0203 per kWh for some types of electricity it supplies directly to customers. 

"For the typical Sol Plaatje commercial consumer, Eskom tariffs would be more expensive by either 39% 71%, 129% or 29% depending on which Eskom tariff [is used]"

Eskom, meanwhile, seems to see little point in continuing to engage in price calculations via the media. 

The utility told Fin24 that it had "already provided data that supports the pricing information in question".

"At any rate is public information, has no intention of engaging in a media brawl with any of its customers or stakeholders."

"We shall enter into no further correspondence in this regard."

But the municipality is hoping the Nersa will bring finality to the spat. 

Why? It says it fears that De Ruyter's comments could "agitate communities into [shutting]  the city down" or even "vandalism and looting of commercial".

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