Umngeni Municipality mayor Chris Pappas has vowed to oppose the proposed 40% electricity tariff increase recommended by power utility Eskom to the National Energy Regulator of SA (Nersa).
Pappas said he had written a letter to Nersa objecting to the proposed tariff hike. This followed reports that Eskom had proposed a 40% tariff increase which could come into effect in April next year.
Pappas said an increase in the price of electricity by this percentage would place an untenable financial burden on residents.
“The proposed tariff rise will disproportionately impact low-income households. Already they allocate a substantial portion of their income to basic necessities such as electricity. Many families will find themselves in a dire position, forced to make impossible choices between essential needs, thereby driving more people into poverty.”
Pappas added that inflation and the cost of living had increased. “Small and medium-sized enterprises are the cornerstone of our local economy, providing vital employment and services to our community. A steep rise in electricity costs will significantly inflate their operating expenses, leading to potential closures and job losses.”
He said the municipality was concerned about the pressure the tariff increase would have on municipal services.
“We are committed to delivering essential services such as water, sanitation and street lighting. The proposed increase in electricity costs will severely constrain our ability to maintain these services at their current levels. We may be forced to reallocate funds from other critical areas, ultimately compromising the quality of life for our residents.”
Pappas added that he recognised Eskom’s need to recover costs and invest in infrastructure.
“We believe that such a steep increase will push paying households and businesses to adopt energy-efficient technologies and renewable energy sources.
However, we strongly urge the National Energy Regulator of South Africa to explore alternative solutions that do not disproportionately affect vulnerable communities.”
DA national spokesperson Willie Aucamp said the party was ramping up the fight against Eskom’s coming 40% tariff increase by inviting public objection to the hike through a petition to Parliament.
“Yesterday the caucus of DA local government mayors began a process of written objections to Nersa. Now, on the back of DA mayors objecting to Nersa directly, the DA is ramping up the fight against Eskom’s outrageous 40% tariff increase with a public petition, available to every South African. The DA petition against Eskom’s 40% tariff hike acknowledged that at a time when South Africans are already facing a dire cost-of-living crisis, no one can afford to pay 40% more for electricity.”
Stellenbosch University’s School of Public Leadership director, Professor Zwelinzima Ndevu, said the proposed tariff increase would have a catastrophic impact on the man on the street.
“Eskom in the past few years has been one of those state-owned entities that are underperforming which resulted in load shedding. This increase comes at a time when the country is experiencing a difficult period of economic challenges, growing inequality, and citizens are struggling to make ends meet due to high levels of unemployment, among others.”
University of KwaZulu-Natal political analyst Siyabonga Ntombela said the short-term positive impact of a 40% hike was that municipalities would increase their revenue through electricity bills collected from the few households and formal businesses that paid for utilities.
“The long-term negative impact is the increase in the number of households and businesses now joining those with illegal connections. Every entity has a limit to exploitation and it seems like Eskom or Nersa do not understand that.”
Ruse Moleshe, managing director of RUBK, an energy and infrastructure consulting and advisory company, said she could not confirm the tariff increase amount but understood the need for a tariff increase.
“The requirements for infrastructure have been growing, especially on the transmission side, so it is expected that the National Transmission Company of South Africa (NTCSA) would require funding to support such plans. Eskom has plans to build more infrastructure in the future, including the small modular reactor that is being considered by NTCSA. The tariff reflects this expenditure and the only way today to recoup it is through consumers.”
Contacted for comment, Nersa said it had not yet received an application for a tariff hike from Eskom.
Eskom said it was not in a position to comment yet on the proposed tariff increase.
“Once Nersa has published the revenue application according to its processes, Eskom will engage on the matter.”
Regarding concerns raised by Pappas and the DA, Eskom said all stakeholders would be afforded an opportunity to provide input to Nersa during its public consultation process.
“Nersa is mandated to make a final decision once all stakeholder comments have been considered.”
The Mercury