NERSA’s 2.2% Cap on Eskom Tariff Commended

OUTA has commended NERSA for rejecting Eskom’s demands for a higher tariff increase and for sticking to the 2,2% allowed under the current Multi-Year Price Determination (MYPD) process.  

“We are appalled that Eskom has sighted current ‘hardships’ as the reason for requesting a much higher increase, especially since these so-called hardships are self-inflicted and exist due to poor leadership – as reflected in the recent Dentons report,” says Ted Blom, OUTA’s Portfolio Director on Energy matters.

We do, however, disagree with NERSA’s comment that a 2,2% increase makes Eskom unsustainable as we believe a tariff hike of 2,2% will force Eskom to seek internal efficiencies and review its cumbersome and wasteful operational processes.

“Eskom’s leadership must change its mindset and realise that it cannot continue to pass its poor productivity, maladministration, expensive contracts and billions lost to corruption, onto the public through tariff hikes,” says Blom.

The damning evidence contained in the sanitised Dentons Report released last week, confirms that Eskom’s leadership has not deserved a cent of bonuses received in recent years.

“We believe an independent and detailed commission of enquiry – as has been requested several times over the past 10 years – is long overdue, and will reveal damning evidence of looting, organised crime and institutionalised fraud within Eskom,” says Blom. “Unless comprehensive action is taken to stop the rot and apprehend the perpetrators within and outside of Eskom, it will not be able to fulfil its role as the nation’s electricity provider.”

The under-recovery of poorly planned and over-zealous revenue targets should not become the consumers’ problem. The people of South Africa are not Eskom’s ‘piggy-bank’ to tap into each time Eskom gets its forecasts and overspending wrong. Minister Lynn Brown and NERSA are urged to stand firm in forcing Eskom to get its house in order and cease the repetitive waste and poor leadership mistakes.

OUTA has it on good authority that Eskom’s lack of robust internal auditing processes has given rise to billions of rands lost to corruption. “Unless Eskom engages meaningfully with its critics, it will continue to suffer massive losses and will dig its own hole deeper,” says Blom.