Tuesday, April 29, 2008

Submission to NERSA on Eskom price hikes

NERSA's requests for comments are in blue and my responses are in grey type.

Stakeholder inputs requested:

Stakeholders are requested to please comment on the following:

1. Given that Eskom states that there has been a significant increase on
primary energy costs from the time of planning to now, please comment
on coal price escalation and methods of restricting the price escalation.
What contribution should primary energy suppliers, especially coal mines,
offer in order to achieve efficiency in the supply chain?

Eskom should sign long term contracts with coal miners and stop using the spot market to obtain coal supplies.

2. The Eskom application includes demand side management (DSM) cost of
R2.5bn that must be recovered from customers other than recovering this
cost from the customers, what other funding options for DSM can be

If Eskom’s tariff structure was determined by levels of consumption then the resulting increased prices with increased consumption would naturally give rise to reduced demand.

Apparently 10% of national electricity consumption arises from the theft of electricity. Thieves of electricity have no incentive to reduce their consumption. Eskom should invest in ways and means to minimise electricity theft.

3. The 53% real increase required by ESKOM will result in a R12.7 billion
profit after tax, please comment on the necessity and adequacy of the
above profit after tax.

See my comment under point 6.

4. Government has granted Eskom R60 billion loan to assist in the capital
expansion program, in view of the current electricity emergency what other
forms of assistance should the Government provide or consider?

See my comment under point 6.

5. What commitments should be required from Eskom during the
consideration of the application and after the conclusion of the

No comment.

6. Any other comments that the stakeholders might propose to the Energy

My general comment is that I accept that the generation and supply of electricity to consumers demands expenditure from the electricity supplier. Thus the supplier is entitled to recover these costs and to make a reasonable profit for investments in the future viability of its generating capacity through what it charges customers for the supply of electricity.

However in the interests of all of us this matter needs to be considered in a holistic manner.

The reality is that the use of non-renewable fuels [coal, gas and nuclear] as the primary energy source for electricity generation is simply not possible in the long term because these resources will come to an end.

Also in the light of world wide climate change, being exacerbated by CO2 and other GH gas emissions from fossil fuel powered electric power stations, international pressure on countries emitting excessive amounts of GHG’s is going to increase considerably over the coming years. That is not to ignore the real detrimental damage resulting from climate change that will be taking place all over Southern Africa.

Thus I would be quite happy to accept increases in the electricity tariff if Eskom was clearly and transparently using the extra money to shift the its energy sources, for electricity generation, to renewable ones such as solar, waves, tides, winds and geothermal.

Right now with Eskom’s current plans for increased numbers of fossil fuel and nuclear fuel fired power stations I see myself and other consumers being squeezed to help fund the long term destruction of ourselves and, if not of ourselves, of future generations.

This simply does not make any sense to me when we as a country have available to us an abundance of renewable energy resources, such as listed above, and the technology for utilising solar energy for electricity generation, for example, is already in use in other countries. Not only that, other countries, not so well endowed with sun light as we are, are busy developing the technologies to utilise waves and tides. We should be too.

Yes we are facing a power generation crisis but Eskom’s proposed solutions whilst purporting to relieve the crisis in the short term will seriously exacerbate it in the longer term.

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