Western Cape Business News

Send  Share  RSS  Twitter  25 Feb 2010

ELECTRICITY: It's Okay, But It Will Hurt


Recent Western Cape Business News

THE Cape Chamber of Commerce says members are relieved that the Eskom electricity tariff is to be increased by 24.8 percent instead of the devastating 35 percent which Eskom was demanding.

It is still going to hurt business but the pain will not be as fierce as we feared,” said Mr Joe Emeran, President of the Chamber. “We must now make sure that the City Council does not simply add the 24.8 percent to electricity bills because that will not be justified.”

Mr Albert Schuitmaker, Acting Director of the Chamber, explained that electricity accounts to the consumers were made up of energy charges, distribution costs and service charges. Increases in Eskom Tariffs would increase the price of the energy component but it should have no effect on distribution costs and service charges. Increases for these components should be more in line with inflation than Eskom tariffs.

The increase will raise the average price per unit of electricity sold by Eskom by 7.3 cents to 41.8 cents. At present small businesses and domestic consumers which used less than 900 units a month were paying 96.7 cents per unit (business) and 77.37 cents (domestic).

If you add the 7.3 cents to these figures the effective increase will not be anything like the extra 24.8 percent that Eskom will be charging because the actual energy cost makes up between a third and a half of the cost to the majority of consumers.”

He said it was unfortunate that the City would be able to give only limited help to industry which used large amounts of power as most of their bills were charges for energy.

Mr Schuitmaker said he would like to see the City come up with a tariff structure that encourages commerce and even domestic consumers to use electricity more efficiently and to manage down their consumption.”As an example he said there should be incentives for business to use more of the cheaper off-peak power and less power during peak hours. This kind of ‘load shifting’ would help to straighten out the demand curve and improve efficiency for producers and reduce costs for consumers.

We need incentives because it is sometimes necessary to invest in equipment to make more ‘load shifting’ possible,” Mr Schuitmaker said.

As an example he said the City should consider payments or discounts for domestic consumers who had ripple control devices fitted to their electric geysers to ensure that they used power only in the off-peak periods.


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