ENERGY: Eskom Hikes Still Unacceptable
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Even after submitting a revised tariff hike application of 35% Eskom have experienced severe criticism, especially from the trade union Solidarity. The main complaint is that people want Eskom to have finalised an adequate financing model for the expansion of its capacity, otherwise they just cannot justify any tariff hike, let alone the 35-45% they are looking for.
"The application for a 35% increase is also unacceptable to us and we will strongly oppose it. Eskom must draw a distinction between the financing of operational costs and financing of capacity expansion. Only when Eskom has a plan for financing its capacity expansion will the company be able to calculate the tariffs required to pay for it," said
Solidarity spokesperson Jaco Kleynhans.
It is also hard to believe an application for an increase that is so extremely far above the level of inflation is necessary. "The revised application does not paint a better picture for South African consumers at all. If Eskom's application for an increase of 35% each year over the next three years is approved, a household that currently pays R900 per month for electricity will have to fork out more than R2 200 for the same consumption by 2012."
In its funding plan, Eskom must simply draw a clear distinction between the R385 billion needed for Eskom's expansion project and operational expenses. The argument is that consumers should only pay for a product or service that is provided and cannot also be held responsible for the large-scale development that has now become essential.
If Eskom developed a financing model and determined tariff increases according to the rise in operational costs, an acceptable tariff increase would be found.
Business News Sector Tags: Energy|