Market commentators have described the ongoing NERSA (National Energy Regulator of South Africa) as disappointing, and urge Eskom to change its business model rather than raise tariffs again.
Ted Blom, energy analyst and advisor to the energy and mining industries and spokesperson for the new OUTA (Organisation Undoing Tax Abuse), comments: “I have reviewed the outcomes of the NERSA hearings that I have testified at since 2009, and if we are going to be honest, the results have been bitterly disappointing as will be gauged when one examines the records of decision that have blessed Eskom with over 700% price increases since 2007.
“Against that backdrop, it is clear that the NERSA hearings have not worked and that people have not been heard.” Ted Blom will testify again at the NERSA (National Energy Regulator of South Africa) hearing next week in Johannesburg as part of the regulator’s current series of public hearings into Eskom’s application for electricity tariff hikes.
He says OUTA’s message to NERSA next week “will highlight how we have pleaded in the past, and NERSA has chosen to ignore our pleadings and has, in our humble opinion, not acted properly and diligently in the execution of its duties. We will endeavour to hold NERSA to book, and act where we believe NERSA has failed.”
Nicolette Pombo-van Zyl, editor of ESI Africa, adds: “The energy sector is currently undergoing a transformation, led by climate change and the need to become more energy efficient. The traditional customers are becoming prosumers by installing rooftop PV systems and the debut game-changing technologies, such as smart metering and electric vehicles (which will require charging stations).
“With this in mind it can be argued that Eskom should rather implement changes in its business model rather than request tariff increases. But, what is often overlooked is that Eskom must not only ensure there is sufficient energy generated and available during peak times, it is also the guardian of an extensive network of transmission and distribution infrastructure – this needs to be funded.”
Pombo-van Zyl points out, that with each tariff increase, the demand for electricity from Eskom will decline as more households and businesses seek alternative energy solutions. She adds: “the question that Eskom should ask itself is whether their business model is sustainable and what alternative solutions there are to tariff increases.”
Blom supports solar energy as an alternative: “New solar (household and business) can be installed in days/weeks at very affordable prices and the payback is shorter than three years. Thereafter the electricity is free for up to 25 years.
“My estimate is that Eskom will be applying for another R80-billion price clawback in the next 24 months (versus R22-billion now) which will effectively require another 32% plus price increase before 2018,” he adds. “That will be on top of further operational cost increases in coal and transport – two cost elements Eskom has not shown in the past that it can control and which increased by average of 20% plus year on year.”