Addressing the issue of Eskom’s ever-rising electricity tariffs

Eskom has applied to NERSA, the energy regulator, for a 15% tariff increase for three consecutive years. The power utility is facing dire financial constraints with excessive corporate debt of more than R400-billion (as per its interim results presentation on 28 November 2018) and outstanding arrear debt for electricity sold, but not paid for, in excess of R20-billion. The following is a collection of Twitter messages published on the topic of Eskom’s application.

Chris Yelland

Eskom cannot simply pass its financial sustainability problems on to the customer through increased tariffs. When NERSA does not give Eskom what it wants, others will have to step in to help share the burden, including:

Eskom itself must share the burden through a lower rate of return on assets, increased efficiency and belt tightening across the board. The shareholder/taxpayer must share the burden through further bailouts/equity injections linked to a recovery plan.

Eskom executives, management, staff and workers must share the burden through reduced pay, forgoing bonuses, reduced numbers, retrenchments and improved productivity. In their own interests and to protect their existing Eskom debt, financial institutions, banks and lenders must share the burden through refinancing of existing Eskom loans with better terms and extending new loans a higher risk.

To protect their existing Eskom business, coal suppliers must share the burden through better prices and special pricing agreements to reduce Eskom’s primary energy costs. The justice department, police, director of public prosecutions, Hawks, courts and Eskom itself must all play their part to root out and punish perpetrators of fraud, corruption, maladministration and unauthorised expenditure at Eskom, without fear or favour.

Expecting electricity customers to bear the burden alone through huge tariff increases, will just accelerate the utility death spiral with severe economic consequences. All combined efforts must be conditional on Eskom implementing a credible restructuring and recovery plan.

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