NERSA must shield South Africa from (yet) another electricity tariff hike

MEDIA RELEASE

18 JANUARY 2022

NERSA MUST SHIELD SOUTH AFRICANS FROM (YET) ANOTHER ELECTRICITY TARIFF HIKE

On Monday (yesterday), the National Energy Regulator of South Africa’s (Nersa) public hearings – on Eskom’s Fifth Multi-Year Price Determination (MYPD5) revenue application for the 2022/23 financial year – started off with passionate pleas from faith leaders, calling on Nersa to reject Eskom’s request for a 20.5% increase in electricity tariffs. The Southern African Faith Communities’ Environment Institute (SAFCEI) SAFCEI and faith leaders representing their communities believe that Eskom’s latest request for, yet another tariff hike, is unjust on top of the increases of electricity costs over the past two years. Much of Eskom’s losses can be attributed to mismanagement and unchecked corruption under previous leadership, and it is being passed onto consumers who are carrying the brunt of its unacceptable debt levels. The public hearings, continue until Friday 21 January 2022, can be accessed via Nersa’s Facebook and Twitter pages.

The two recurring themes in submissions made by SAFCEI, with further entries from faith leaders – relates to the crippling effect another electricity price hike will have on vulnerable households and communities, and the entire country, and that Eskom appears to take little responsibility on itself for its mismanagement and high levels of inefficiency, but instead expects citizens to shoulder the consequences.

A faith leader representing marginalized communities in the greater Cape Town area, SAFCEI’s Lydia Petersen says, “People are outraged, saying that this (the electricity tariff increase) signals the proverbial last nail in the coffin and will have a devastating impact on our vulnerable society. For many in our communities, to make ends meet, this is more than they can take, and this increase will only exacerbate the perpetual struggle to feed families, as most are grant-led households. Many of these people are not able to participate on this platform, as their financial situation does not allow them access to a smart phone or data.”

Petersen told Nersa, “Year after year, we come here to voice our displeasure of these preposterous tariff increases, which is way above what we can afford. But year after year, even as corruption, mismanagement and inefficiency are exposed, Nersa continues to grant these high increases. Are we the scapegoats for the billions of rands lost in revenue? We cannot afford the exorbitant electricity costs as it is now, an increase will cripple us! Many households receive social grants and unemployment is rife in so many SA communities. Crowded street corners bear testament to this. For too many families it is a continuous struggle to make ends meet. A social grant cannot feed an entire family with little, or no money left for electricity and in some homes, electricity is deemed a luxury.”

Reverend Rachel Mash of the Green Anglicans also presented. She says, “Electricity is already so expensive that many homes no longer use it or only for the first part of the month. This proposed 20.5% tariff increase fails to facilitate universal access to electricity. In the current economic situation and particularly with the economic crash of Covid, families are struggling to put food on the table. They will then not use electricity which impacts on the ability of children to study, further exacerbating poverty.”

According to Mash, political interference has slowed down the move to renewable energy and delays in the Renewable Energy Independent Power Producer Programme (REIPPP), which has led to more expensive peaking plants. The need to transform Eskom, so that it is fit for purpose for South Africa, in the context of a global energy transition, is being deliberately handbraked by vested interests in coal and nuclear.

Mash adds, “A transformed Eskom will indeed serve us all. Nersa needs to use its authority to remove red tape to proactively support the renewable energy industry. This will also allow us to access international green funding. Delays in opening legislation that will enable local governments to supply renewable energy to their citizens, is adding to the costs and compromising options for affordable reliable local energy solutions. For homeowners who have installed solar panels, the cost of changing to a new meter, and the monthly tariff, makes it unaffordable. And in this way, Eskom is also losing access to potentially cheap sources of electricity from home producers (currently priced at R1 per KWH). At its very core, this increase will affect SA citizens the most. Why then is this then downplayed?”

SAFCEI member, Rev Petrus Gysman, based in the Eastern Cape and speaking on behalf of his faith community, says, “The biggest challenge for my community is affordability. For some locals, energy is a luxury they can’t afford. As it is, most people already resort to outside fires to cook and candles to see at night.”

Representing the Diocese of Kimberley and Kuruman, Professor David Morris pointed on for his community, “An increase in energy costs will result in immediate and dire consequences for the people we represent in these areas who are already being strangled in the grip of energy poverty.”

According to Jen Stern, a member of the Western Cape Religious Society of Friends, better known as Quakers, “Many electricity consumers feel that Eskom is failing in its mandate. The entity has failed to maintain existing infrastructure, and failed to effectively build new infrastructure, despite the expenditure of significant funds, and it has failed to provide reliable and affordable electricity.  Which raises the question in many minds of whether Eskom can be trusted to utilise the requested income effectively. Will Eskom use the money it raises from this increase to invest in affordable, socially, and environmentally just and in line with what people want. Or will it spend the funds raised to promote fossil fuel energy sources, including harmful Karpowerships and to extend the life of the aging and failing Koeberg nuclear power station? As a resident local to Koeberg, the latter is a major concern for me.”

According to SAFCEI’s Executive Director Francesca de Gasparis, it is disheartening that, with the unprecedented rise in electricity costs will severely hamper efforts especially in vulnerable communities to make a better life for themselves and their communities. Research commissioned by SAFCEI in 2020 revealed that, at the time, South Africans earning an average wage were then- already struggling to make ends meet. The research showed that people were having to choose between spending on food, transport, toiletries, baby formula and other necessities or buying electricity. It was also found that many households end up relying on other forms of energy such as paraffin to provide light and heat which are dangerous. Electricity is supposed to be basic service that every citizen has a right to. Expensive electricity is exclusive electricity, which is in opposition to the country’s national goals.

“Since this research was done – in the midst of the first year of Covid and the ongoing threat of loadshedding –the situation has not only deteriorated but has become untenable for many who are already struggling to survive and provide for their families. Many households have lost their sources of income, especially those in the hospitality industry. However, the cost of living continues to rise at an exponential rate, which is not in line with inflation and certainly not in line with people’s salary increases. It was recently reported that 1 in 4 children under the age of 5 years, suffer malnutrition,” adds de Gasparis.

“In our view, Eskom – along with the Department of Mineral Resources and Energy (DMRE) – is failing in its mandate and both entities are responsible for the increasing energy poverty across South Africa, since electricity is neither accessible nor affordable to most. Instead of investing in and developing the potential of renewable- affordable and sustainable- energy, we see the promotion of fossil fuel energy sources such as Karpowerships and secretive plans to extend the life of the aging Koeberg nuclear energy plant.,” says de Gasparis.

Public hearings will be held as follows:

• 17 January: Western and Eastern Cape, 2pm to 5pm (virtual)
• 18 January: KwaZulu Natal: 2pm to 5pm (virtual)
• 19 January: Free State, Mpumalanga and Limpopo, 1pm to 5pm (virtual)
• 20 January: Northern Cape and North West, 1pm to 5pm (virtual)
• 21 January: Gauteng: hybrid public hearing in Midrand, 9am to 5pm (virtual)