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AfriForum rejects Eskom tariff increase as ill-considered

AfriForum has submitted comments to the National Energy Regulator of South Africa (Nersa) regarding Eskom’s Retail Tariff Structural Adjustment, which determines electricity tariffs for the next financial year. The civil rights organisation argues that while Eskom is effectively driving up the cost of living by shifting the financial burden onto consumers, Nersa is neglecting its duty to protect the public against ill-considered decisions such as these. AfriForum is now calling on Nersa to reject Eskom’s application for increased tariffs and to critically assess the power utility’s future applications.

Eskom’s latest application forms part of the three-year process which, during this cycle, resulted in significantly higher electricity tariff increases than originally announced due to a calculation error. The coming financial year is the third year of the original application and the second year in which tariffs have been adjusted upwards as a result of the calculation error. There is still an outstanding amount that must be recovered in the next cycle, but it is not yet known how this will be applied.

In this application, Eskom is shifting most of the burden of the increased tariffs onto the fixed charges paid by paying consumers. This means that the announced 8,8% increase will cost those who are trying to use less electricity more, as these costs cannot be managed through reduced consumption. This secures Eskom’s revenue but further alienates consumers.

“This shifting of the financial burden is a short-sighted decision by Eskom. Although it may improve Eskom’s finances in the short term, it is causing an increasing number of consumers to try to disconnect themselves from the grid. In the long term, Eskom will lose more paying customers, ultimately leading to even greater financial distress,” says Dalena Beyers, Adviser for Local Government Affairs at AfriForum.

“The fact that Eskom can justify paying R5,4 billion in bonuses on the back of profits from the previous year, yet is unwilling to adjust tariffs for consumers, is also an indictment of Nersa. As the regulator, Nersa is supposed to protect the interests of the public, but its failure to critically scrutinise Eskom’s tariff increases is not only bad news for consumers, but also for Eskom, which is losing more and more customers,” says Beyers.

AfriForum will continue to put pressure on the authorities and champion the interests of consumers.

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