Oh shucks, it's Eishkom all set to shock us

Editorial, Sunday Independent, Johannesburg, 13 April 2008

The National Energy Regulator of South Africa has asked for public comment on Eskom's proposed price hikes - well, here is one: the sooner the national non-supplier of electricity stops treating its customers like naughty children who need a spanking, the better.

To add insult to blackouts, Eskom has asked for a 53 percent price hike after inflation which, Eskom, even we can work out is about 60 percent. Except the madness does not stop there. Economists briefed by government officials have been told that the hike for poorer people will be 30 percent, while residential and business users will be slapped with a 70 percent increase, with unspecified "others" getting a 38 percent hike.

Seventy percent for what? For rolling blackouts when we cannot pay exorbitant increases, even if we wanted to, and to see Eskom raising its profit for next year to R12,7 billion.

Apparently, though, Eskom sees some ingenuity in its madness. This is not a case of national electricity supply policy being decided at a Mad Hatter's tea party, it is in fact what Eskom regards as a diabolically clever plan to shock and awe us into submission. Although Eskom does, indeed, need hikes to pay for its previous inadequacies, it also believes, the economists were told, that massive hikes would shock us into meeting the decreed 10 percent cut in usage by all. And such would be the savageness of the increases that we would permanently cut our usage. No doubt many consumers would be happy to cut all ties with the monopoly forever, should that option be viable.

But, though raising the electricity tariffs of businesses and households by 70 percent will indeed have some shock effect, what is not being taken into consideration here is the effects such punitive increases would have on the economy.

Eskom cannot be seen in isolation of the macroeconomic picture. Massive hikes may see its customers staggering under the fiscal equivalent of the shock and awe bombardment of Baghdad, but they will also savage business profits, escalate job losses, shred family budgets and add to inflation.

The alternative seen by Eskom and government is to phase in heavy increases - as it should have been doing over the past decade when it must have been apparent to any Eskom executive who had his lights on that we would soon be in this power abyss. A government White Paper of 10 years ago warned of the need for more power stations. But when it was ignored why was Eskom not demanding action and warning of the crisis? Why was it not gradually hiking its rate in anticipation of the inevitable?

The time has come to stop Eskom's desire to spread its problems to the rest of the country, acting in splendid isolation of the rest of the economy. Tariff hikes and long-term plans to meet the nation's needs should be thrashed out at a power summit of all stakeholders. We need to stop this sanity-shedding.


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