Eskom works on tariff suite
INTENSIVE USERS: TEN APPLICATIONS RECEIVED
Hopes to address high subsidy burden, boost economic growth.
Power giant Eskom said it is developing an energy-intensive industry tariff suite to support economic growth and longer-term sustainability of South African industry.
This follows after energy regulator Nersa published for public comment Eskom’s application for a two-year discount price agreement with Sublime Technologies, situated in Kriel, Mpumalanga.
If approved, Sublime will be the second distressed industrial user getting a discount tariff from Eskom in an agreement that allows the company to preserve jobs, while using Eskom’s excess capacity.
Without the discounted tariffs, other customers would have to absorb this marginal contribution, which would lead to higher tariffs.
Nersa in August last year unprecedently approved a two-year Eskom tariff discount for Silicon Smelter’s plants, where job opportunities were at stake, as the group struggled to compete internationally with competitors who buy electricity at subsidised prices.
Silicon Smelter CEO Nellis Bester confirmed to Moneyweb that the plants are once again operating at full capacity after the implementation of the tariff discount. He said 200 direct job opportunities and more than 3 200 indirect job opportunities have been restored.
Eskom spokesperson Khulu Phasiwe said the Department of Energy, National Treasury, the Department of Trade and Industry and Eskom are working together to finalise a framework for short-term negotiated pricing agreements, as Eskom had received about ten similar applications.
The suite would focus on every day tariff peaks, more specifically during the high winter peak periods, as well as decrease the extent to which intensive users subsidise other Eskom users.
Intensive users are on time-of-use tariffs, paying considerably more for electricity during the morning and evening peaks, especially during winter, while they are actually using electricity 24 hours per day.
This tariff structure is aimed at sending a pricing signal to users in an effort to reduce the daily and seasonal electricity usage in peak hours when it is expensive to generate electricity and supply is under pressure.
Intensive users subsidise smaller users through three different levies charged on the Eskom Megaflex tariffs. Two of those levies together amount to a subsidy of about 10c/kWh paid by large users to the benefit of Eskom’s smaller customers.
This puts South African intensive users at a disadvantage to international competitors who don’t carry the same burden and are receiving electricity subsidies from their governments as they are regarded as critical industries.
Eskom, in return, is considering balancing it with a take-or-pay agreement, which means industrial clients would have to inform Eskom of the amount of energy they would use and pay for it even if their actual demand is below that level.