The decision by the National Energy Regulator of SA (NERSA) to allow Eskom to increase electricity tariffs by 12,74%, which is above the inflation rate at the time wages are contained below inflation, will widen energy poverty. This increase, which will come into effect from the 1st of April 2024, will worsen the burden of the rising cost of living on the working class.
The working class households (mostly in the townships) paid R0.37 Kilowatt per hour (KHw) in 2007, and by 2023/24 we are paying R1.97/kWh. This represents a nominal increase of 432% in electricity. The 12,74% increase for 2024/25 accepted by NERSA will mean electricity prices will increase to more than 442% nominally between 2007 and 2024. If adjusted for inflation, our members will pay between 316-345% more than they did in 2007. And yet the quality of the product is far worse because of extremely high levels of load-shedding and, in townships and villages, ‘load reduction’ that is even more frequent.
The cost of living is already high because of rising fuel, food, and transport costs. In the last two months, fuel prices went up consecutively, raising the prices of petrol from R22,49 in January to R24,45 in March 2024. The rising fuel prices have led to a dramatic increase in commuter transport costs. The Household Affordability Index (HAI) shows that the sustained inflation rates in the past few years have led to the high cost of household food and hygienic baskets. Year-on-year, the household food basket has increased by 6,2%, taking the total cost of household groceries to R5 277 30. Interest rates rose above the pre-pandemic levels and two-fold from the historic lows of the pandemic levels to new highs at 11,75% at the prime lending rate. The increased cost of living across all areas shows that an electricity tariff will worsen the burden and the crisis of cost of living.
The South African Federation of Trade Unions (SAFTU) urges the government to apprehend the thugs who are costing Eskom so much through financial leakage due to sabotage, mismanagement, and looting. Eskom continuously incurs losses which it recovers from poor customers by hiking electricity prices.
The primary costs constitute the greatest portion of Eskom’s cost recovery requests. They are elevated because a portion of those costs goes to procuring diesel to mitigate unscheduled breakdowns of power stations. However, of major concern is the cost to Independent Power Producers (IPPs) which constitute 21,8% of the total tariff requested by Eskom. The cost of guaranteeing the IPPs a market and a βreasonable returnβ is burdening the working class households and widening the energy poverty in South Africa.
