EVER ELECTICITY HIKES, SUF­FER THE CON­SUMER

Observer on Saturday - - Analysis & Opinion - WITH: Ackel Zwane Act­ing Ob­server on Satu­day Edi­tor

Liv­ing stan­dards of the av­er­age per­son in the king­dom and the sur­vival of busi­ness are at stake with the ever in­creas­ing cost of elec­tric­ity es­pe­cially when there is no cor­re­spond­ing im­prove­ment in sup­ply and in­fra­struc­ture.

It is even more dis­heart­en­ing when con­sid­er­ing the por­tion of ex­pen­di­ture as­so­ci­ated with the wage bill, travel al­lowances over and above the en­ter­tain­ment pro­vi­sion, not to men­tion the exit pack­ages. But that is fine with the work­force in the util­ity sec­tor be­cause it is cush­ioned from the dev­as­tat­ing ef­fects of hav­ing to set aside more than half the liv­ing wage to cover en­ergy needs for the house­hold. In a coun­try where the ex­is­tence of ef­fec­tive con­sumer as­so­ci­a­tion is taboo, of­ten the con­sumer is at the mercy of the ei­ther the reg­u­la­tor or the watch­dog role of Par­lia­ment, which is only ef­fec­tive on the eve of an elec­tion. In this coun­try, no one seems to strike the bal­ance be­tween the cost of liv­ing and the stan­dard of liv­ing and this is fur­ther ex­ac­er­bated by the fact that 10 per cent of the pop­u­la­tion en­joys 90 per cent of the gross do­mes­tic prod­uct, hence the sta­tus of mid­dle in­come coun­try. How­ever a ma­jor­ity of our cit­i­zens sur­vive on hand­outs even for such basics as med­i­ca­tion. It is still a won­der as to where we would all be were it not for the con­tri­bu­tions from the Global Fund in the form of HIV and AIDS, tu­ber­cu­lo­sis and malaria drugs.

Last year this time Eskom, the ma­jor source of nearly all our elec­tric­ity, sought a 19.9 per­cent hike for this year. The lo­cal dis­trib­u­tor, Swazi­land Elec­tric­ity Com­pany, is for­ever ad­vis­ing the con­sumer to use the re­source spar­ingly while at the same time logic dic­tates that sales vol­ume have a mean­ing­ful bear­ing of rev­enues gen­er­ated by SEC. But the way it is put is such that the sup­plier has the neg­a­tive im­pact of the hikes at heart, the feel so much for the con­sumer, a make be­lieve know­ing very well that there is lit­tle or noth­ing that the con­sumer could do to in­flu­ence favourable price ad­just­ments.

Each time elec­tric­ity in­creases, the dis­pos­able in­come falls, so does spend­ing and, there­fore, and nat­u­rally the gross do­mes­tic prod­uct plum­mets. Very few con­sumers in this coun­try are able to save be­cause apart from the bur­den of ever in­creas­ing elec­tric­ity hikes, there is also the un­con­trol­lable in­ter­est rates as a ma­jor­ity of the work­ing pop­u­la­tion sur­vives on money bor­rowed from the banks and the shy­locks at ev­ery cor­ner. Be­cause the banks have a whole­sale li­cence on charges, they are able to dig even deeper into the earn­ings of work­ers leav­ing them with lit­tle or noth­ing to use as dis­pos­able in­come, which in all other cases is eaten away by elec­tric­ity. The pres­sure on the con­sumer is enor­mous.

Each time there is a power out­age the con­sumer is hardly alerted, re­sult­ing in dam­aged elec­tri­cal ap­pli­ances and spoiled food­stuffs in re­frig­er­a­tors. The sup­plier is not obliged to apol­o­gise or com­pen­sate the ad­versely af­fected con­sumer. In some parts of the coun­try such as Ns­ing­weni, Zwide and sur­round­ing ar­eas, res­i­dents say they are so used to power cuts that those that af­ford find gen­er­a­tors work­ing more than main power sup­ply.

Strate­gies

Some of the strate­gies to en­cour­age con­sumers to save elec­tric­ity in times of im­mi­nent load cishalo­gesi shed­ding is to use novel slo­gans like

(switch off the power). In such times, there are scan­dals fil­ter­ing in the en­ergy sec­tor, es­pe­cially from our neigh­bours whereby di­rec­tors are said to be prof­it­ing by cut­ting off sup­ply to the un­co­op­er­a­tive users and re­con­nect­ing to those that have no prob­lem pay­ing huge bribes just to keep pro­duc­tion run­ning.

No doubt a power util­ity needs rev­enue, main­tain or re­place as­sets and to ex­pand to cover its grow­ing mar­ket. One way to se­cure the ad­di­tional rev­enue is to in­crease the tar­iff. On the other hand the in­crease in the tar­iff has an equally dev­as­tat­ing ef­fect on the life of the con­sumer and that of busi­ness. Of­ten very lit­tle con­sid­er­a­tion is made to this end be­cause the sup­plier is wor­ried for its sur­vival and its com­forts given the strong leg­isla­tive pro­tec­tive coat it wears.

In an ex­plo­ration of the ram­i­fi­ca­tions of in­creased elec­tric­ity prices on res­i­den­tial con­sumers of dif­fer­ent in­come groups by the Rand Cor­po­ra­tion in South Africa and other re­search, it showed that a dou­bling of the price of elec­tric­ity is ex­pected to lead to a 50 per cent re­duc­tion in over­all con­sump­tion in the res­i­den­tial sec­tor.

Sub­sti­tutes

This study finds that the long-term abil­ity of a con­sumer to re­duce elec­tric­ity con­sump­tion in­creases with in­come level. High-in­come con­sumers are more re­spon­sive be­cause they own more devices that have other en­ergy sub­sti­tutes. Fur­ther, they are able to sus­tain higher out­lays for such items as in­su­la­tion that re­duce their elec­tric­ity con­sump­tion. Gov­ern­men­tal poli­cies that might in­crease the price of elec­tric­ity can be tai­lored to ex­empt lower in­come groups with­out sub­stan­tially re­duc­ing the over­all re­duc­tion in con­sump­tion. Low-in­come users rep­re­sent only a small por­tion of to­tal con­sump­tion and are rel­a­tively un­re­spon­sive to elec­tric­ity price in­creases.

This re­minds one of a vil­lage in the Eastern Cape when the African Na­tional Congress in­tro­duced ru­ral elec­tri­fi­ca­tion to boost voter par­tic­i­pa­tion on the eve of some elec­tion year over a decade ago. Be­cause the peo­ple had sources of re­new­able en­ergy such as col­lect­ing dung and burn­ing it as fuel to pre­pare meals, they had grown ac­cus­tomed to liv­ing with­out the lux­ury of elec­tric­ity and they com­mented that they were grate­ful to the rul­ing party for bring­ing the lux­ury be­cause they could use it to light up their poverty and watch it even at night. They had no other use for the elec­tric­ity be­cause they were so poor to even af­ford ap­pli­ances or think of projects to im­prove their well­be­ing through. Im­me­di­ately af­ter the elec­tion, Esk om an­nounced a hike in the tar­iff and the peo­ple sim­ply could not af­ford the use of elec­tric­ity un­til to­wards the next elec­tion year.

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