High tariffs won’t help Eskom – it’ll doom utility

IT IS with great interest that I have followed the views on Eskom’s request for a 19.9% tariff increase. I note comments from various interested parties that the increase is required to ensure the sustainability of Eskom.

Unfortunately for Eskom, the opposite is true.

Consumers of power have more and more alternatives to reduce their consumption of electricity, as simple as more efficient lighting, motors and air conditioning, and also gas, solar and wind alternatives.

Combine the reality of alternatives reducing annually in cost, with ever-increasing Eskom prices and the dissatisfaction of dealing with a poorly managed and corrupt Eskom, and you have a major incentive to no longer buy from the power utility.

Financial calculations show that with a 19.9% tariff increase (probably more for end consumers), the financial benefits of investing to reduce Eskom power consumption are significantly enhanced. In fact, it becomes a no brainer for almost all Eskom’s key customers, including most domestic consumers, to implement alternative solutions for all or part of their power needs.

Tragically for Eskom, once a customer leaves, they will be permanently lost as customers.

The greater the increase above inflation, the quicker Eskom will decline and the greater the cost to South Africa as Eskom continues to abuse its customers, damages the economy and employment, and denies the realities of the demand for electricity.

I have, domestically and in my business, cut my Eskom power consumption by in excess of 60%, with great financial benefits. Can I cut my usage by another 50%? Yes, but going ahead depends on the National Energy Regulator of South Africa’s (Nersa) tariff decision and future expectations.

Ask the army of “electricity” consultants hoping for a large tariff increase.

The only alternative for Eskom to survive and to not significantly damage the country and its own future, is to ensure its customers continue to buy Eskom electricity. Customers are not interested in what a poorly run business might need in revenue when there are ever-cheaper alternatives.

For the sake of South Africa’s future, this requires that Nersa provides (ideally supported by the government) an undertaking to limit this and future tariff increases close to inflation.

I suggest Nersa has no choice. Eskom, ignore your customer at your peril. Cape Town