POOR SOUTH AFRICANS LIKELY TO BE HIT HARDEST BY LOOMING ESKOM TARIFF INCREASE

MEDIA RELEASE

30 MARCH 2021

POOR SOUTH AFRICANS LIKELY TO BE HIT HARDEST BY LOOMING ESKOM TARIFF INCREASE

This week, those consumers receiving their electricity directly from Eskom, will be hit with a 15.63% tariff increase, starting 1 April 2021. While this day is usually filled with practical jokes, there is nothing funny or fake about how the electricity increase will impact poor South Africans, who are  already struggling due to ongoing socio-economic effects of the Covid 19 pandemic.

Executive Director of the Southern African Faith Communities’ Environment Institute (SAFCEI) Francesca de Gasparis says, “The lack of affordable and reliable electricity keeps many South Africans stuck in an endless cycle of poverty. It robs people of the opportunity that affordable electricity provides, to develop their educational and entrepreneurial potential in a safe and healthy environment. Covid-19 has made an already-dire situation worse, people who were already struggling to afford energy costs are now in an even worse situation.”

“According to recent media reports, South African businesses are “scrambling” to get off the Eskom grid to remain cost effective. One of the four major banks echoed these sentiments and predicted “a significant increase in alternative-energy-funded solutions by the end of the year”. While big businesses can make energy choices to not rely on Eskom, it is South African citizens whose pockets will bear the brunt of the consequences of the tariff increase,” says de Gasparis.

Beyond the inability to afford electricity, everyone reliant on Eskom still find themselves having to look to alternative energy sources due to load shedding and insecure energy access. Many in informal settlements, who have a desire to access electricity, find themselves forced to rely on illegal electricity connections which in turn lead to regular, devastating fires in their communities.

A recent study of 100 poor urban and peri-urban families across the Cape Flats showed that electricity prices had a dire impact on financially-struggling families. The lockdown and its resultant loss of jobs, made the situation worse as families now had even less money to spare. Families reported being forced to choose between various needs to be able to afford electricity that meets their minimum needs. Some families reported having to sacrifice baby formula, fruit and vegetables, meat and toiletries in order to afford any kind of energy option to cook the little food that they have.

One of the study participants said about the price increases “It impacts me very badly because now I have to cut costs on my monthly groceries and sometimes, I pay my rent late because I had to use the money to buy more electricity. It is even harder for me because I'm unemployed.”

Study participants also reported only using electricity to cook and for lights and their televisions, with uses for heating considered a luxury, a worrying trend as we approach another cold Cape winter.  They also reported noticing an increase in paraffin, gas and other alternative forms of energy accompanying each price hike by Eskom.

Another participant observed, “Increasing electricity prices also have an effect on the price of paraffin, which is more expensive now. We are forced to buy liters of paraffin, which must last for the entire month then we only use it on certain days”. They further highlighted being aware of the environmental, health and safety challenges posed by the use of alternative energy sources like paraffin but noted they had no choice, as they could not afford to use only electricity at the current prices and have to survive on an energy mix based on affordability.

Kim Kruyshaar of Green Audits Into Action (GAIA) – who conducted research, on behalf of SAFCEI, to analyse the cost of electricity adds, “Eskom’s electricity used to be some of the cheapest in the world. However, since 2008, the price of electricity has gone up by 300%. This is the result of poor management and corruption resulting in delays and cost overruns in the building of essential additional power generation plants as well as a focus on more expensive and polluting coal fired options despite decreasing costs of renewable energy. Delays in opening up legislation that will enable local governments to supply renewable energy to their citizens, is adding to the costs and compromising options for affordable reliable local energy solutions.”

Kruyshaar adds that, on top of this, programmes to provide a basic allocation of subsidised electricity to low-income households are being compromised by Eskom’s high electricity prices. The current cross-subsidy mechanisms are simply becoming less affordable. Local governments are caught in the pincer grip of having to provide essential services to an increasing number of households that now qualify for Lifeline subsidies as a result of the devastating economic impact of Covid. At the same time, increasing Eskom tariffs are nudging more affluent customers to seek off-grid solutions. This means that  Eskom loses the revenue that was historically generated from more affluent customers, revenue which provided the cross-subsidy for lower income households.

She says that the underperformance of the Department of Mineral Resources and Energy (DMRE) to support electrification and access to alternative energy for low-income communities, is delaying access to energy for many households. Examples include the 89 000 SWH (Solar Water Heater) destined for low-income housing but which have been in storage for a number of years. As well as the Covid induced budget cut for 2020 /21 of R1.5bn for the electrification of an estimated 43 000 residential properties, while the R1bn budget for nuclear energy has not been reduced.

“The solution for cheaper, cleaner electricity generation is a national re prioritising of energy as an essential service and a wider view of how to provide appropriate energy.  With over 50% of households in many urban areas unable to afford the full cost of electricity supply, a new subsidy model from the national government is required. Furthermore, the models that determine Eskom’s tariffs such as the Multi-year Price Determination (MYPD) and Regulatory Clearing Account (RCA) need to be reviewed. SAFCEI, along with other civil society and industry bodies have been calling for this for years,” Kruyshaar concludes.

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Issued by Maria Welcome, on behalf of SAFCEI. For media queries, contact:

Maria on maria.welcome.comms@gmail.com/082-936-9199

Natasha on natasha.adonis.comms@gmail.com/0797-999-654