R/€ = 15.02Change: 0.23
R/$ = 13.32Change: 0.21
Au 1141.43 $/ozChange: -4.52
Pt 951.25 $/ozChange: 6.25
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Aug 31, 2012

Big users urge hard line on Eskom costs, as utility delays tariff submission

Africa|Energy Intensive User Group|Eskom|Renewable Energy|Renewable-Energy|Africa|South Africa|Electrical Energy|Electricity Price Increases|Energy|Environmental|Mike Rossouw|Power|Operations|South Africa
Africa|Eskom|Renewable Energy|Renewable-Energy|Africa||Energy|Environmental|Power|Operations|
© Reuse this

South Africa’s Energy Intensive User Group (EIUG) has urged the National Energy Regulator of South Africa (Nersa) to be more rigorous in its assessment of some of the cost factors informing Eskom’s application for electricity price increases for the five-year period from April 1, 2013, through to March 31, 2018.

The call came as Eskom requested a month extension from Nersa to give it time “to do additional scenarios”, which government had requested be included in the application. Eskom was due to submit the application on Friday August 31.

The EIUG, whose 31 members consume about 44% of South Africa’s electrical energy and whose operations turn over about R794-billion yearly, is particularly keen for Nersa to take a hard line on prevailing supply and demand inefficiencies, as well as nonelectricity-related costs.

Speaking ahead of Eskom’s third multiyear price determination period (MYPD3) submission to Nersa, EIUG chairperson Mike Rossouw said the “right” price path for South Africa should also be informed by such issues as affordability, cost reflectivity and improved transparency of costs and tariffs.

Prices, Rossouw said, were rising “too fast and too high” for companies in a range of industries – particularly those in the ferrochrome and silicon metals sectors – to remain globally competitive.

Reports suggest that the State-owned utility will seek yearly increases of between 14.6% and 19% over the period, which it believes are necessary to raise the average tariff to a cost-reflective position.

These increases would be in addition to the slew of above-inflation between increases that have been sanctioned by Nersa between 2007 and 2013. South African power prices have more than doubled over the period, with Eskom’s selling price having climbed from around 20 c/kWh to 50.3c/kWh last year. However, prices paid by municipal consumers are far higher and also less uniform.

The utility has also indicated that a price level of 90c/kWh, in real terms, would be necessary for it to cover its operating costs and move ahead with its R323-billion, five-year capital investment programme.

But Rossouw said that each cost and return element in Eskom’s application should come under intense scrutiny, particularly as its research shows that many large and small users were already paying more for electricity than their foreign competitors.

The EIUG was particularly keen for Nersa to get to grips with nonelectricity costs featuring in the tariffs, such as those related to losses and theft, environmental levies, the use of power revenues by municipalities for nonelectricity expenditure, as well as subsidies for renewable energy and poorer consumers. Rossouw stressed that poor consumers should be protected, but said that there should be debate of the nature of that support.

He also questioned whether it was appropriate for Eskom to be earning the returns being sought, given that its investment programme was, ultimately, being funded by the South African consumer.

“Theoretically, Eskom is being paid for by consumers . . . so I could equally argue that the current consumer has a share in Eskom. So, if returns are being made, why aren't we getting those returns, by way of . . . having those returns being avoided to help to reduce the electricity price?”

EIUG was likely to canvass a number of these issues in the upcoming Nersa hearings.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
Other Electricity News
Updated 5 hours ago Zambia and Zimbabwe drew more water than they should have from the Kariba dam to generate electricity, draining the reservoir to 29% of its capacity in September, compared with 70% capacity last year, an engineering body said on Thursday. The Zambezi River Authority...
Updated 6 hours ago The technical and economic challenges associated with the large-scale deployment of renewable-energy had largely been solved, Professor Dr Clemens Hoffmann of Germany’s Fraunhofer Institute for Wind Energy and Energy System Technology argued during a presentation in...
Updated 7 hours ago Gauteng's current heat wave has not affected power consumption during the critical peak period, Eskom said in a statement on Thursday. Although the simmering heat heightens electricity demand during the day because of the increased use of air conditioners, there is a...
Article contains comments
Article contains comments
Latest News
Updated 4 hours ago The contraction in the metals and engineering sector is worsening, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) warned on Thursday. Speaking after the release of production numbers by Statistics South Africa, Seifsa chief economist Henk...
Updated 5 hours ago Local innovation will undoubtedly provide solutions to many of the challenges faced by Africa, as it sets the tone for progress and enables businesses to gain a competitive advantage, create additional jobs and change peoples’ lives. Speaking as part of a panellist...
Updated 5 hours ago Zambia and Zimbabwe drew more water than they should have from the Kariba dam to generate electricity, draining the reservoir to 29% of its capacity in September, compared with 70% capacity last year, an engineering body said on Thursday. The Zambezi River Authority...
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
Sphere Holdings CEO Itumeleng Kgaboesele
Black-owned investment holding company Sphere Holdings plans to raise a further R1-billion in the coming months in support of its strategy to become a leading black industrial enterprise, which could ultimately seek a listing on the JSE.
Energy analyst and EE Publishers MD Chris Yelland warned recently against excessive optimism regarding timescales for the proposed construction of new nuclear power plants (NPPs) in South Africa. He was speaking at a Nuclear Roundtable in Johannesburg. “I think we...
Malawi’s Lilongwe Water Board (LWB) is inviting eligible bidders to prequalify for the board’s efficiency improvement works, which will be implemented as part of the E24-million Lilongwe Water Resources Efficiency Programme.   LWB CEO Alfonso Chikuni explains that...
CROATIA, AN EU MEMBER BUT NOT A TDCA MEMBER On July 1, 2013, Croatia officially became the twenty-eighth member of the European Union (EU). Despite Croatia’s accession into the EU, it is yet to become party to the Trade, Development and Cooperation Agreement (TDCA)...
The Council for Scientific and Industrial Research (CSIR) has announced that its new Inundu airborne electronics testing, evaluation and training pod had made its first test flight on September 10. The successful flight was undertaken from Lanseria International...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96