Eskom makes proposals to protect the poor from power price hikes

There are already several proposals on the table to help cushion the blow of electricity hikes for South Africans.

This is according to Eskom chief executive André de Ruyter, who on Wednesday was quizzed by MPs about the imminent tariff hikes. If these proposals are given the thumbs up by policymakers, low-income households may be given greater access to free basic electricity.

De Ruyter did not elaborate on any of these proposals during the Wednesday meeting.

On Tuesday the National Energy Regulator of South Africa (Nersa) announced that the Pretoria high court ordered it to allow Eskom to recover an additional R10-billion through tariffs. This is on top of the R6-billion in increases announced by the regulator just two weeks ago.

At first, Nersa allowed the beleaguered power utility to recover a total of R32.6-billion. But after the court order, the regulator allowed another R6-billion to be recovered from its customers.

After Tuesday’s announcement, the average tariff will be increased by about 15% starting in April.

The Nersa announcements sparked concerns — voiced by members of the public enterprises portfolio committee on Wednesday — that steep tariff increases will hurt South Africans already reeling from the Covid-19 economic downturn and load-shedding.

De Ruyter said Eskom is “very aware” of the Nersa decision’s effect on consumers. 

“We understand that we live in very economically constrained times,” he said. “We have, therefore, put forward some proposals that the government is considering in a number of fora for mitigating the impact on in particular the poorest of the poor.”

But, he added, “this is not an Eskom decision. This is something that rests in the policy space, but we have certainly made those proposals to the relevant government departments.”

De Ruyter’s statement echoed sentiments he expressed earlier this week on a Free Market Foundation podcast. During the Monday afternoon discussion, De Ruyter said he believes Eskom and Nersa will be able to address the electricity tariff issue “in a way that does not cause a price shock to the economy”. 

Earlier on Wednesday, Eskom chief financial officer Calib Cassim explained that the key driver behind the tariff increases is that the power utility can no longer depend on continued financial support from the government. Nersa’s announcement on Tuesday will mean that Eskom can lessen its burden on the fiscus, Cassim said.

He said, however, measures will be in place to protect vulnerable consumers and businesses.

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