South Africa: Eskom increase likely to hit middle class

Original Post Date: 2010-02-25 Time: 02:00:02  Posted By: News Poster

As South Africans prepare to hear the final verdict on whopping power price hikes on Wednesday, Energy Minister Dipuo Peters has hinted that rich and middle-class homeowners will be saddled with a new sliding-scale tariff to soften the blow for poor communities.

Opening the African Utility Week power indaba in Durban on Tuesday, Peters said she did not know what tariffs the national energy regulator Nersa would announce this morning – but she said the government favoured a new stepped-tariff system based on the principle that “the more you use, the more you pay”.

She did not specify whether the new structure would apply solely to residential customers (who use less than 18 percent of electricity supplies), but her responses to questions indicated that some of the biggest power-guzzling industries and mining houses (which collectively use more than 66 percent of the county’s power) were likely to be exempt from the new tariffs.
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Asked whether big industries enjoying special “sweetheart” tariffs would also have to pay the new tariffs, Peters said the government supported cross-subsidisation by industry but it was also conscious that industry and big business worked according to long- term supply and reliability contracts.

Questioned about renegotiating massively discounted tariffs with the BHP Billiton aluminium smelters in Richards Bay and Maputo, which use about 5 percent of national power, Peters and her Public Enterprises counterpart, Barbara Hogan, said Eskom was in discussion with some of its largest customers on this issue, but they did not elaborate.

Peters also spoke about the establishment of a regional electricity distribution system and six subsidiary bodies which would help to cross-subsidise poorer municipalities.

The government also hoped to expand renewable energy projects such as wind and solar power. However, the bulk of the country’s future energy was likely to come from nuclear power.