Electricity summit gets direction
May 16, 2008
By SAMANTHA ENSLIN-PAYNE
Durban - A new, cabinet-approved electricity pricing policy will be thrashed out today at the energy summit convened by Nedlac - the government, labour and business negotiating chamber - to achieve consensus on some of the divisive issues that have arisen out of the electricity crisis.
One such issue is the sharp price hike of 53 percent applied for by Eskom. This request has generated strong opposition from within the ruling party.
This became evident after Alec Erwin, the minister of public enterprises, said this week that smoothed out, regular price rises were the way to go, rather than the massive increase Eskom had requested.
It now seems almost certain that the 53 percent price hike is no longer on the table.
The cabinet said in a statement issued yesterday that the new electricity pricing policy sought to ensure that the value chain: contributed to economic growth; provided universal access to electricity; created an investor friendly pricing structure that promoted efficient cost recovery measures and a reasonable return on investment; led to environmentally friendly usage of resources; provided open and non-discriminatory access to the transmission system; and promoted greater levels of transparency on electricity prices.
Bheki Khumalo, the spokesperson for the department of minerals and energy, said the electricity pricing policy could be a framework that the National Energy Regulator of SA (Nersa) would have to take into account when deciding on electricity tariffs. He would not disclose any further details on the policy.
It is unclear if Eskom will now submit a revised application to Nersa in light of the new direction from the cabinet.
Fani Zulu, Eskom's spokesperson, said yesterday that no changes had been made to the application to Nersa.
"Of course, there is a process under way that may affect the application," he said. "But how it affects [it] we do not know. We still have to look at the details of what the cabinet will present at the energy summit."
Eskom may grow pale at the thought of submitting a new application. Thembani Bukula, who is responsible for electricity at Nersa, said a revised application would delay matters, as a new process to seek public comment would have be to launched.
Nersa will hold public hearings on Eskom's request for a price increase next Friday in Pretoria. It will make its decision known on June 6. But "rather they should indicate in the public hearing if there is any change", said Bukula.
If Eskom does not get the price increase - which it claimed a few months ago was an imperative - would the government then lend more support to the utility than the R60 billion loan it has already pledged?
"No, further support for Eskom is not under consideration," said Thoraya Pandy, the spokesperson for the national treasury.
"The R60 billion is in support of Eskom's long-term investment programme and the quantum of this requirement is not materially affected by whether the long-term electricity price adjustment is phased in [over] one or two years, or over a somewhat longer period."
The cabinet also announced that it was setting up a national emergency programme management office under the auspices of the department of minerals and energy. This office would co-ordinate efforts to deal with the electricity emergency, track initiatives, provide technical support and ensure that decisions made by the national electricity response team (Nert) were implemented.
Khumalo said Nert was a loose association that had been institutionalised within the government.
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