Western Cape Business News

Send  Share  RSS  Twitter  12 Mar 2012

ELECTRICITY: Tariff Increase Of Just 11%


Recent Western Cape Business News

CAPE TOWN businesses and consumers should be able to look forward to electricity tariff increases of just 11.03 percent in July this year, if the City implements the recommendations of the National Energy Regulator.

Eleven percent will still be nearly double the inflation rate, but it will come as a relief after a series of increases of about 25 percent and more,” said Mr Michael Bagraim, President of the Cape Chamber of Commerce and Industry.

But he warned there was guarantee as the City had ignored the recommendations of the regulator in past years.

Originally Eskom applied for increases of 45 percent for three years but this was cut back and the Regulator finally approved a series of three increases of about 25 percent a year. This year’s increase was to be 25.9 percent but it has now been reduced to 16 percent.

The situation is confusing,” said Mr Bagraim. “Eskom wanted 45 percent and received 25 percent increases yet it still made a profit of R12.8 billion in the first half of last year. It really makes one wonder about Eskom’s capacity to plan for the future.”

Mr Peter Haylett, chairman of the Chamber’s Industrial Portfolio Committee, said municipal increases should always be lower than Eskom increases as half the costs reflected in municipal accounts were for distribution and service and those costs rose in line with inflation and not Eskom’s extravagant demands.

Unfortunately many municipalities have taken advantage of the Eskom crisis and increased tariffs by unjustified amounts. If the extra revenue had been invested in infrastructure and maintenance of the distribution grid the situation might have been acceptable, but a lot of it has gone into general revenue.”

He said many businesses and consumers were suffering as a result of high electricity prices and this was not the time for municipalities to make extra profits from electricity sales.

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