Eskom has made an abject admission of failure and it expects the electricity user to pay for its inefficiencies.
That was the prevailing sentiment at a heated public hearing in Port Elizabeth on the power utility’s proposed 15% hike in electricity tariffs.
Eskom officials were eventually sent back to the drawing board by the National Energy Regulator (Nersa) to revise their fourth multiyear price determination.
They were also told to include their own shortcomings – which have resulted in the state-owned enterprise struggling to keep the lights on.
The representatives from the cash-strapped entity came under fire at the third public hearing, held at the Dolphins Leap Conference Centre in Humewood on Wednesday, from Nersa, Bay business people and community representatives for the proposed price increase of 15% a year for the next three years.
They accused Eskom of poor management and operation systems, resulting in the request for the exorbitant hike in tariffs.
Nomfundo Maseti, the chair of the Nersa panel, which is responsible for monitoring, finalising and approving the tariff hike, said Eskom should revisit its application and detail the internal failures which had contributed to the proposed increase.
Autocast SA CEO David Mertens, the spokesperson for the High Energy User Group, said all spending on new capital projects should be suspended until new capacity was required, as Eskom already generated more electricity than it could sell.
The multiyear price determination (MYPD 4) application equates to R219bn for 2019/ 2020, R252bn for 2020/2021 and R291bn for 2021/2022 – which Eskom says is essential to keep it functional.
Nelson Mandela Bay Business Chamber CEO Nomkhita Mona said Eskom was trying to fix the same model when innovative thinking was needed instead to counteract the trend of rising tariffs.
Somila Gogela, co-founder of the Culture Consciousness Society, which represents KwaNobuhle and Zwide residents, said that the metro’s poorest residents would be hit the hardest by the increase as the costs were already too high for them.
Maseti also questioned the quality of work being performed by Eskom, pointing out that maintenance work at power plants seemed to have little effect as the plants continued to break down.
Eskom chief financial officer Calib Cassim said they would revise the application to include the extent of Eskom’s internal costing and present the revised application to the Nersa panel at the Gauteng hearings at the end of January.
Maseti said the hearing in Port Elizabeth differed from the one held in Cape Town earlier this week in that Eskom officials had actually admitted to faults and problems they could have managed better.
These included plant performance, the deterioration in generation capacity and even the availability of plants.
“It is very clear from this and the previous hearings that the issue of affordability is a serious concern,” Maseti said. “The other main thing is, we want Eskom to take accountability and not transfer all the negative impact of their own actions onto consumers.
“So Eskom has also [undertaken] to look at the cost responsibility from its side and adjust its current request so that it takes full accountability of its actions.”
Nelson Mandela Bay Business Chamber board director MC Botha said the ripple effect of such high tariffs could lead to economic decline, a decrease in investment and an increase in unemployment and poverty.
“They are still singing the same song – it is just now more focused.
“The total revenue applied for over the three-year period is almost R800bn,” he said.
Botha said the MYPD 4 application was unrealistic and could mean that Bay consumers would contribute R17bn in revenue to Eskom over the next three years.
“What we’ve heard today is an abject admission of failure.
“We are not in safe hands. Eskom expects the electricity user to pay for its inefficiencies,” he said.
Mertens said SA was already producing more electricity than it could consume and was the only country he was aware of with such a luxury of reserve storage. “The current installed capacity as of September 2018 at Eskom’s disposal is 52,000 megawatts, while the current peak usage is 35,000 megawatts, with planned additional capacity expected at the Kusile and Medupi plants of about 8,000 megawatts, he said.
“Capital spending is the biggest financial burden on Eskom as its spending continues unabated while sales dwindled from 2013.
“And spending still continues under MYPD 4 and beyond despite Eskom’s decline – customers should not have to pay for Eskom’s recklessly incurred capital [spending].”
Cassim said the excess reserves were required to ensure electricity supply was uninterrupted during the winter peak season and summer, when the majority of the 26 plants operated by Eskom were undergoing maintenance.
“Since the new board has come on line in terms of addressing corruption and mismanagement, we have been much more transparent to the public,” he said.
“Also, the engagements with our shareholders – Eskom has definitely changed that.
“However, you don’t fix the issues in Eskom overnight.
“It is a long-term industry, it will take money and time to fix,” Cassim said.