Energy costs to raise food prices

ESKOM’S BID TO RECOUP BILLIONS WITH INCREASED TARIFFS COUNTERS THE EASING OF INFLATION,WRITES

SISEKO NJOBENI

He said rapid technology advances and an abundance of natural renewable energy resources had enabled the transition to lower electricity prices.

“Changing demand patterns require maximum system design flexibility to be properly handled and managed,” Mallinson said.

“When new-generation capacity is constructed or contracted, older generation fleet needs to be systematically shut down in concert with actual demand.”

The Energy Intensive User Group (EIUG) of Southern Africa also called on Nersa to reject Eskom’s application. EIUG chief executive Xolani Mbanga said further increases in tariff would only worsen Eskom’s death-spiral.

He said the demand for electricity in the three-year period covered by the regulatory clearing account (RCA) was far less than the installed capacity of Eskom.

“Had the generation fleet been performing optimally, there would have been no need to purchase additional power on short-term contracts and from international utilities,” he said.

The RCA is a backward-looking mechanism that seeks to reconcile what Nersa awarded Eskom on the basis of what was forecast in the multiyear price determination and what materialised, as reflected in the utility’s financial statements.

Mbanga said Nersa should only allow costs associated with the lower sales and revenue of electricity.

“The costs associated with Eskom’s inability to plan and manage its operations in respect of its primary energy, such as the use of expensive coal, transport of coal between power stations and water treatment costs, should be disallowed.” – Additional reporting by Sechaba ka’nkosi.