Public Interest SA Submits Critical Input on Eskom’s MYPD 6 Revenue Application for FY2026 – FY2028
- Digital Comms Team
- Nov 20, 2024
- 3 min read
MEDIA STATEMENT
Johannesburg, Wednesday, 20 November 2024 – Public Interest SA has submitted its formal comments to the National Energy Regulator of South Africa (NERSA) regarding Eskom’s Multi-Year Price Determination (MYPD) 6 Revenue Application for FY2026–FY2028. While we take a neutral stance on the proposed percentage tariff increase, we have raised urgent concerns over the continued lack of transparency in Eskom’s negotiated pricing agreements (NPAs) with large industrial users, which we believe undermine fair pricing and equity.
Public Interest SA recognises the complex energy challenges South Africa faces—ranging from rising energy costs to chronic load-shedding and growing inequality. In this context, any tariff increase must be carefully balanced against the economic vulnerability of households, small businesses, and other key sectors.
Key Areas of Concern
1. Impact on Stakeholders: South Africans continue to bear the brunt of high energy costs, with tariffs having risen by 653% between 2007 and 2022. Further tariff hikes threaten to exacerbate energy poverty, disproportionately affecting low-income households and small businesses. As SMEs play a critical role in job creation and economic resilience, we express concern that rising tariffs could stifle this sector, which already lacks access to preferential rates available to large industrial users.
2. Lack of Transparency in NPAs: Eskom’s ongoing refusal to disclose the terms of its NPAs with large industrial users, such as South32’s Hillside Aluminium Smelter, is a critical issue. Despite multiple judicial rulings mandating the disclosure of such agreements, the public remains in the dark about the actual pricing arrangements. The secrecy surrounding these NPAs creates an unjust energy pricing system where ordinary consumers and SMEs subsidize the operations of large, often multinational, corporations. This perpetuates systemic inequality and undermines public confidence in Eskom’s pricing policies.
3. Economic Inequality: Our analysis highlights that while large industrial users consume significant amounts of electricity at preferential rates, the broader South African economy gains marginally from these arrangements. Much of the profit generated by these entities is remitted abroad, rather than reinvested locally, reducing potential job creation and economic growth. Public Interest SA is calling for full transparency on the economic impact of NPAs, including a cost-benefit analysis that factors in their broader societal implications.
Key Recommendations for NERSA
To address the concerns raised, Public Interest SA is urging NERSA to implement the following measures:
Full Disclosure of NPAs: Eskom must immediately disclose all terms of its NPAs to restore public trust and ensure that energy pricing is fair and equitable.
Support for Tariff Equity: Future tariff structures must prioritize fairness, ensuring that ordinary consumers and SMEs are not disproportionately burdened. This includes eliminating cross-subsidization practices that allow large users to benefit from preferential rates at the expense of households and SMEs.
Enhanced Revenue Collection: We also recommend that NERSA compel Eskom to implement modern metering systems for bulk electricity consumers, particularly municipalities, to improve revenue collection and ensure the financial stability of Eskom.
Cost-Benefit Analysis of NPAs: Eskom should conduct and publicly share comprehensive analyses comparing the economic benefits of NPAs with the impact on vulnerable households and SMEs.
Public Interest SA firmly believes that transparency, fairness, and accountability are essential to the future of South Africa’s energy sector. By adopting these recommendations, NERSA can help create a more equitable pricing structure that protects the interests of all South Africans, especially the most vulnerable. The organisation will be making oral presentations to NERSA in the coming weeks.
MEANWHILE
Eskom's revenue base is being severely undermined by the wilful non-payment of electricity bills and the illegal connections to the grid. This growing issue poses a significant threat to South Africa's energy security and requires immediate and stringent action.
While we acknowledge the challenging economic conditions currently faced by many, it is critical to recognise that revenue leakage due to criminal activities is a major risk to the country's power infrastructure. Eskom notified its customers months ago of the impending upgrades to prepaid metering systems and the imperative for users to comply. It is therefore dispiriting for communities to now seek to blame Eskom for implementing upgrades that seek to assure electricty supply and sustainability of its business operations.
We urge all prepaid electricity users, particularly those involved in illegal connections, to regularise their accounts and support Eskom in stabilising its financial position. Ensuring the long-term sustainability of the utility is in the best interest of all South Africans.
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Image: Moneyweb
For more information or to schedule an interview with a Public Interest SA representative, please contact:
Bagaetsho Oteng