Eskom hike to hit municipalities hard


Municipalities will bear the brunt of Eskom’s proposed tariff hike, the SA Local Government Association said on Wednesday.

Eskom hike to hit municipalities hard

Electricity pylons in Beaufort West. Nersa is holding public hearings on Eskom’s proposed revenue price determination. (Picture: Chris Kirchhoff/MCSA)

“This price hike will drive them to what we call a municipal tipping point… It will drive them to a point where they wouldn’t be able to meet the basic needs of the public,” Salga working group chairperson Subesh Pillay told a National Energy Regulator of SA (Nersa) public hearing in Midrand.

He said many municipalities were already financially stranded and in debt to Eskom.

Salga municipal infrastructure services director Mthobeli Kolisa explained that municipalities would battle to maintain their Eskom bill, as things such as street lighting would be more expensive.

The proposed electricity price increase – a 16% price hike for each of the next five years – would more than double the price of electricity over five years, taking it from 61 cents a kilowatt hour in 2012/13, to 128 cents a kWh in 2017/18.

Kolisa pointed out that over 10 years (from 2007 to 2017) Eskom would have increased the electricity price 600%.

He argued that while the proposed tariff plan made provision for the poor, the middle class, who were currently able to pay for electricity, might no longer be able to do so in future. “Review the increase and stretch it over 10 years instead of five,” Kolisa recommended.

He urged the panel to strike a balance with Eskom and municipalities and consider the implications.

The Nersa hearings, chaired by Thembani Bukula, are being held to gather views on Eskom’s multi-year price determination (MYPD3) application.

Earlier, Eskom’s finance director Paul O’Flaherty said it needed the increase to maintain revenue and cover operating costs.

He said if Eskom merely minimised operating costs, as had been suggested, the servicing of machinery would be neglected and there would have to be massive staff reductions.

Eskom hike to hit municipalities hard

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Eskom hike for salary increases


One of the reasons Eskom is applying for an electricity hike is because the average annual salary of one of its employees is expected to be R820 000 in 2017 and 2018, according to a report on Saturday.

Eskom posts massive profits

Beeld newspaper reported that Eskom’s total salaries for about 45 600 employees at that time would be about R37bn.

These figures are one of the reasons Eskom gave to the National Energy Regulatory of SA (Nersa) as part of its request to increase electricity tariffs from 1 April 1, with 16% for the next five years.

Beeld reported that the information was part of Eskom’s submissions handed in to Nersa.

In the documents Eskom claimed that in the current book year, the average salary per worker is R633 000 annually.

According to the documents, the reason for the high salaries was because new power stations needed more employees, and there was need to get more skilled workers and to keep them.

However, the National Union of Metalworkers of SA’s Karl Cloete told Beeld that their members at Eskom do not get salaries like that.

“We want to see who gets paid so much that the average is so high. We do know that Eskom’s top-managers have been getting big bonuses and increases in the past decade,” Cloete said.

Investment Solutions economist Chris Hart told the newspaper that no company in the private sector could afford to pay salaries like that.

Eskom’s spoksperson Hillary Joffe did not deny the proposed salary increase.

Nersa is expected to announce Eskom’s tariff increase on 28 February

– SAPA

Eskom hike for salary increases

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