Call for pre-paid electricity to fund Eskom costs

News > news - 28 Jul 2009

Hard-pressed SA homeowners are being asked yet again to dig deep into their pockets to further finance Eskom's expansion plans.

And while nobody really questions the need for continuity of supply that these multibillion-rand plans will bring, there is a widespread feeling that the burden of funding could be more evenly spread and therefore more moderate, says Gerhard Kotzé, CEO of the ERA South Africa.

Kotzé was reacting to the latest increase of more than 31 percent granted to Eskom by the National Electricity Supply Regulator (NERSA). The increase follows the hike of more than 20% last year and predictions that electricity costs will double within two or three years.

"There are numerous issues in this context - 'bulk' prices for industry and commerce that are less than for household consumers, municipalities that are happily making significant mark-ups on electricity supply, the lack of a coherent national policy on alternative energies and energy saving devices, the lack of competition in the generation and distribution of electricity and so on.

"Arguably the biggest problem of all, however, is the unofficial electricity rates 'boycott', which is costing municipalities billions of rands. Pre-paid electricity metering would seem to be the solution. This is nothing radical. Such meters are already in use to a limited extent locally and are simply part of life in the UK and the US, for example.

"Their wider use in SA would serve the dual purpose of obliging recalcitrant consumers to pay for their electricity in advance whilst also encouraging more economical use of electricity in general by creating greater awareness of the day-to-day cost.

"Of course such a step is a political hot potato. The alternative however is to continue to hike electricity tariffs indefinitely and thereby reduce consumer spending power, retard economic growth and increase job losses."

Kotzé says that without wishing to be cast as some sort of electricity activist - "and ignoring for a moment the lack of coherent policy on alternative energy sources " - it is abundantly clear that too much of the burden of helping to finance Eskom's expansion plan is falling on a shrinking base of householders.

"It seems equally obvious that spreading the burden of funding Eskom's plans would mean more moderate electricity increases for all. And the most practical way to do that would be to incentivise the installation and use of pre-paid electricity meters, perhaps through differentiated rates, tax deductions or other subsidies."

Issued by ERA South Africa

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