The National Energy Regulator of South Africa (NERSA) is conducting public hearings regarding the 32% tariff increase requested by Eskom for 2024. The South African Federation of Trade Unions (SAFTU) strongly opposes the proposed tariff increase because electricity hikes combined with the high costs of other household and essential goods makes living so expensive for working-class households.
In the past 15 years, electricity prices grew by more than 507%. If the 32% increase proposed for 2024 is accepted by NERSA, it will mean electricity has increased by more than 539% nominally between 2007 and 2024. Moreover, the 32% is 6 times higher than forecasted headline inflation in 2023 and 7 times higher in 2024. This is despite wages for ordinary workers growing below headline inflation.
Given that metro municipalities, residential estates and flats owners add their tariffs to make some extra revenue, the final prices of electricity has become expensive and unaffordable for working class people living in metro municipalities. Earlier this semester, this led to a big protest in Tembisa where residents and small shop owners protested the electricity tariffs imposed by Ekurhuleni Metro Municipality on top of the yearly increases by Eskom.
Due to growing unemployment and poverty, more and more people resort to circumventing buying of electricity and opt for informal connections. Coupled with the fact that provision for private entities to produce their own electricity reduce demand for electricity from Eskom, Eskom pass on the burden of generating sufficient revenue onto consumers by increasing electricity prices.
In motivating for this staggering increase, Eskom cited amongst other contributing factors the increase in primary energy costs and the costs of procuring electricity from the Independent Power Producers (IPPs).
The mismanagement of Eskom is also contributing to ballooning tariffs of electricity. The failure to maintain the ailing old fleet has led to generation plants tripping regularly, forcing Eskom to use diesel instead. Hence, the primary energy costs on Diesel usage contributes 7,85% to the 32% tariff hike proposed by Eskom.
Let alone the great costs of privatisation in the long term, plans to privatise energy generation division of Eskom are already costing us in the short-term. That procurement of electricity from the Independent Power Producers constitutes 9,05% to the proposed tariff hike for 2024 illustrates this fact.
SAFTU has maintained previously that IPPs are hastening the privatisation of Eskom which will contribute to high costs of electricity in the future. It seems this prediction has already caught up with us. Eskom tries to rationalise the contribution by IPPs to the proposed tariff by citing “procurement on short notice”. In invoking this, an attempt is made by implication to deceive the public about law of demand and supply, by which the public is expected to understand that greater and sudden demand for energy by Eskom is pushing prices of electricity from IPPs higher.
SAFTU is not deceived. The costs of procuring electricity from IPPs have increased because IPPs wants to maximise profits. Once Eskom is dismantled through decommissioning of old power plants and IPPs hold a monopoly of energy generation, the high increases in electricity tariffs will be the order of the day.
Our strong suspicion is that even the exponential increases in electricity hikes in the past 15 years were to attract private investments than they were to cover lost revenue and Eskom debt. Because of the historic efficiency of Eskom, electricity tariffs were historically low in SA compared to international tariff standards, and thus incompatible with profiteering motives of private corporations globally. Their plan to privatise Eskom since 1998 have led to cumulative increase in electricity tariffs as soon as they realised that low tariffs were not attracting investors in the early 2000s.
SAFTU encourages working class people, who suffer most from the electricity hikes, to organise resistance and fight for a transformed Eskom, and a move towards a genuine Just Transition with green energy production. We have laid a basis to fight against the rising costs of living and against privatisation of SOEs including Eskom on 24 August. We must consistently wage a fight back into the future. Capitalists and their government will not volunteer to make necessary steps unless they are profiteering from them. Therefore, we must force these concessions through struggle.