DA seeks to break Eskom’s monopoly with bill

The DA will formally table a bill which it says will end Eskom’s monopoly and lower electricity prices if enacted.

The power utility holds a monopoly over power plants and the transmission of electricity, with observers saying this has directly contributed to escalating costs.

Analysts have said the best way of ending the monopoly is to separate transmission and distribution assets from the power-generation business.

In its Independent System and Market Operator Bill, the DA proposes the establishment of an independent body, owned by the state, tasked with buying electricity from electricity generators. The operator would function as a wholesaler of electricity that sells it to distributors and customers at a wholesale tariff, DA leader Mmusi Maimane said on Monday.

The entity would function independently to electricitygeneration businesses to ensure fairness among generators, and encourage competition and innovation, he said.

It would also be responsible for buying power from generators, including independent power producers (IPPs), through a power purchase agreement.

Its operating cost would be factored into the wholesale tariff in line with the regulator’s approval. The entity would be tasked with ensuring that the new electricity produced by generators is incorporated into the national electricity grid and circulated to consumers.

The ANC previously tabled a similar bill, but withdrew it in 2015 without much explanation.

Maimane said electricity price increases hit South Africans hard, with Eskom wanting a further 15% increase after the National Energy Regulator of SA granted it a 4.41% price increase for 2019/2020 and approved a 5.23% average price increase that came into effect at the beginning of April.

“Over the past decade, Eskom’s electricity prices have increased by about 356%, while inflation over the same period was 74%, which means that electricity prices have increased four times faster than inflation over the past 10 years.

“This is due to a wide range of factors, with the most systemic cause being a complete lack of competition in the energy sector. Government has a monopoly, which breeds inefficiency, rampant corruption and maladministration the only way to keep the cost of electricity down is to introduce competition in the electricity market,” Maimane said.

The bill will allow metros with a proven history of good financial governance and electricity reticulation management to trade with electricity generators directly, buying electricity straight from the source.