Massive city power increase would be grossly unfair

Cape Times
Thursday, 2nd April 2015

David Lipschitz
​Portfolio head of energy
Greater Cape Town Civic Alliance

ON MARCH 19, deputy mayor and financial director of the City of Cape Town Ian Neilson announced that Eskom wants a 22.27 percent increase instead of the currently approved 12.69 percent increase. The City of Cape Town is blaming Nersa for delaying its usual budget announcement by about a month, as it has been waiting for Nersa to confirm this higher increase.

This is hypocritical. What isn’t hypocritical is the huge increase that consumers will he hit with, not just regarding electricity prices – everything is going to increase, including the cost of petrol and diesel. Considering massive wage increases demanded by union members, plus this electricity increase, one can expect car manufacturers and mines to close down and the South African economy is going to suffer.

The reason the city delayed its budget announcement was because it has been expecting this additional increase!

Rumours have been circulating for some time of a proposed 24 percent increase. Nersa’s suggested increase is 22.27 percent and historically the city has increased tariffs by more than Eskom.

One should note that Eskom’s 22.27 percent increase is close to 17c per kWh, so the city only needs to increase its electricity tariffs by about 10 percent to recover this increase, and if it adds inflation, then we should expect an increase of about 15 percent!

But the city has never chosen to increase tariffs by the cents amount Eskom has given it, and rather increased tariffs by the same or a higher percentage. This is grossly unfair.

Taking this into account, the city could “give back” to its homeowners and limit the increase to 11 percent and will still not lose any money when looking at the increases it has already earned over the past seven years.

Many more people would come to live in Cape Town – a city with relatively cheaper electricity prices than the rest of the country.

On the positive side, homeowners, including ones in townships, will shortly be able to make their own electricity more cheaply and inventors and entrepreneurs will force the Eskom monopoly to come to an end.

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