Eskom tariff hikes ‘will only’ increase discontent

Increases in electricity tariffs will only add to the dissatisfaction of South Africans who might seek to punish the ANC at the polls next year, but the final verdict is still out, say political analysts.

A recent high court judgment paved the way for Eskom to increase tariffs by a cumulative 33.8% in the next two financial years when earlier this month it dismissed the judicial review applications on the National Energy Regulator of South Africa’s (Nersa) revenue determination and tariff approval of Eskom’s MYPD5 application for the 2023/24 and 2024/5 financial years.

Nersa said on Friday that it welcomed the Gauteng High Court’s decision.

The first tariff increase in the MYPD5 of 18.65% came into effect on April 1 for direct Eskom customers and July 1 for municipal users, and a second tariff hike of 12.74% is earmarked from April 1, 2024 for Eskom direct users, followed by municipal consumers from July 1, 2024.

The Gauteng High Court judgment followed applications by the DA and the SA Local Government Association (Salga), respectively, to review Nersa’s decision on Eskom’s MYPD5 revenue application for the 2023/24 and 2024/25 financial years, made in January this year.

The DA wanted the MYPD5 decision declared invalid and suspended while giving Nersa six months to remedy the situation.

It argued that the court should declare the need to increase electricity tariffs exponentially due to the government’s failure to take expert advice, plan, or take action to meet the country’s electricity needs.

Salga also rejected the increases following consultations with municipalities, arguing that they were irrational and that certain considerations were not taken into account in making the decision.

Salga argued that the hikes would push municipal customers to alternative energy, negatively affecting municipal revenue, saying that municipalities were particularly concerned about their ability to purchase bulk electricity at the new tariffs.

In finding in favour of Nersa, the court said: “When all is considered and the detailed and extensive reasons furnished by Nersa are compared with the attacks on its decisions, none of the review grounds pass muster.

“All relevant factors have properly and in detail been considered, the conclusions reached were neither arbitrary nor irrational and the issue of cross-subsidisation was considered at the appropriate stage.”

Nersa said on Friday that it was in the process of studying the full judgment.

Analysts believe this may agitate an already disgruntled electorate that is struggling to keep up with the high interest rates that have resulted in a cost-of-living crisis exacerbated by unstable fuel prices and power supply.

Professor Zwelinzima Ndevu, of Stellenbosch University’s School of Public Leadership, added: “With high levels of unemployment, inequality and poverty this ... will certainly contribute to the continued public distrust of the ruling party and has the potential to hurt it mostly in urban/cities. The rural areas will not hugely be impacted by this but it will be one of the deciding factors for young people.”

Political analyst Professor Sipho Seepe said that the hardships experienced by South Africans “can be laid on the doorsteps of the ANC government.

Electricity increases are likely to add to the precarious situation they find themselves in”.

“It is now a given that the ANC is unlikely to do well. This is the result of having dismally failed to deliver on its promises.

“Given its political bankruptcy, the ANC will not come up with anything new. Rehashing past promises and blaming state capture for its demonstrable incompetence has become embarrassing.

“It’s only salvation will come from the lost votes that will result from many of the new start-up political parties. My sense is that many South Africans are likely to be happy to see the back of the party,” he said.

UWC adjunct political science professor Keith Gottschalk said: “One big unknown is how angry ANC voters are with the daily power cuts, as well as electricity price rises, and the extent to which they might abstain from voting as a result.

“Electricity prices will increase not only over the next two years, but for many years to come, because building all the urgent new transmission cables must be paid for, on top of new solar and gas power stations.

“Media reports that the ANC now owes a debt of R150 million for its 2019 election campaign.

Paying this back will wipe out most of its campaign budget for the 2024 elections. On the other hand, the long-delayed revival of the ANC Women’s and Youth Leagues may have a positive impact on its electoral campaigning.”

In response to the judgment, STOP COCT founder Sandra Dickson said the joint DA and Salga effort to overturn the Nersa decision was opportunistic and deserved the court’s dismissal of the application for a judicial review.

DA MP Kevin Mileham said: “We believe there are deficiencies in the way the tariff is being determined, particularly adjustments made without public consultation, just on Eskom’s say-so.”

Cape Times