https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Opinion / Latest Opinions RSS ← Back
Africa|Business|Coal|Consulting|Energy|Eskom|Power|Service|System|Maintenance
Africa|Business|Coal|Consulting|Energy|Eskom|Power|Service|System|Maintenance
africa|business|coal|consulting-company|energy|eskom|power|service|system|maintenance
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Article Enquiry

Upward pressure

Close

Embed Video

Upward pressure

Photo of Terence Creamer

23rd August 2024

By: Terence Creamer
Creamer Media Editor

ARTICLE ENQUIRY      SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

At the first meeting between members of the Cabinet and senior business leaders since the formation of the Government of National Unity, it was agreed that the National Energy Crisis Committee (Necom) should be repurposed, as the risk of loadshedding continues to decrease.

Energy Council of South Africa CEO James Mackay said the aim was now to shift focus from interventions aimed at arresting the operational crisis at Eskom’s coal stations to addressing system-wide pressures, including growing concern over electricity affordability.

Advertisement

To be sure, the issue of affordability is fast replacing loadshedding as South Africa’s next electricity crisis.

Necom’s repurposing to focus on this problem and other system- wide constraints is important but has not come soon enough to make an immediate difference.

Advertisement

Eskom and the National Transmission Company South Africa (NTCSA) are already well advanced in preparing to submit allowable-revenue applications for the coming three years, starting on April 1, 2025.

It has emerged that Eskom has been consulting with the National Treasury and the South African Local Government Association on an application that will result in a 36% hike in the unlikely scenario that it is approved as is.

Be that as it may, there are slim prospects of moderating the increase to inflation-type levels without massive taxpayer support, the prospects for which are even slimmer.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa has already voiced his unease at the prospect of such a hefty hike, arguing that all South Africans, but especially poor households, are already facing an affordability crisis.

The Minister believes the remedy lies in a review of the Electricity Pricing Policy, as well as in finding new ways to subsidise poor households, most of which are not benefiting from the current free basic electricity allowance.

However, such a review has not yet started and will take months, if not years, to unfold.

Indeed, considerable work will be required to translate any new policy into a workable formula to replace the prevailing multiyear price determination methodology on which Eskom’s and the NTCSA’s upcoming applications will be based.

In addition, participants in the electricity supply industry, including municipal utilities, Eskom and the NTCSA continue to insist that tariffs are not yet at cost-reflective levels and that they also need to be restructured so that sales volumes and network and service charges can be fully unbundled to reflect these distinct costs.

What’s more, there is still a need for large-scale investment in new electricity assets, including new and cleaner power plants, as well as national and regional grids, which are creaking under the weight of years of underinvestment and, in some cases, poor planning and maintenance.

Given the current mixed messages about the electricity tariffs, if could well fall to Necom to provide South Africans with a frank assessment of reality, which is not a pretty one.

The truth is tariffs are going to rise further and any move to cap them artificially will have serious long-term consequences.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options

Email Registration Success

Thank you, you have successfully subscribed to one or more of Creamer Media’s email newsletters. You should start receiving the email newsletters in due course.

Our email newsletters may land in your junk or spam folder. To prevent this, kindly add newsletters@creamermedia.co.za to your address book or safe sender list. If you experience any issues with the receipt of our email newsletters, please email subscriptions@creamermedia.co.za