Calib urged the country to help industrial customers navigate the transition to cost-reflective electricity tariffs.
Eskom has requested an increase to its allowable revenue that, together with already approved regulatory clearing account amounts, would translate to a 20.5 percent hike in the standard tariff. However, some stakeholders have described this increase as unaffordable.
While all non-Eskom presenters have objected strongly to the increase, the focus during the first two days of hearings into Eskom’s 2022/23 allowable revenue application has been primarily on the plight of poor households rather than industrial customers.
On the third day of the public hearings, CFO Calib Cassim called for urgent interventions to assist large industrial customers to navigate the transition to cost-reflective electricity tariffs. “Internationally, utilities and governments are retaining large industrial customers through tax rebates, tariff discounts or similar financial mechanisms,” he explained. “Certain customers in South Africa are competing internationally with these subsidised customers, so they need support to be competitive and sustainable.”
He added that the country needs to assist industry to remain sustainable, as retaining such operations is critical from an economic perspective.
Calib noted that targeted subsidies would cost less than subsidising the yearly shortfall between Eskom’s regulated revenue and its “prudent and efficient costs”. He suggested that long-term and short-term negotiated pricing agreement frameworks, which had been approved by Mineral Resources and Energy Minister Gwede Mantashe, could go a long way in supporting vulnerable industrial sectors.
However, while acknowledging the affordability concerns being raised, Calib urged the National Energy Regulator of South Africa (Nersa) to assess Eskom’s costs on their merits before deciding on what regulatory levers or policy interventions could be used to offer support to consumers. “We should not let affordability cloud the merits of Eskom’s application and the efficient costs should be allowed to be passed on,” he said.
