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Free State Agriculture (FSA) will question the way ESKOM is allowed to set unaffordable tariffs at a public hearing with NERSA, the national Energy Regulator, on Friday 5 November.
The Multi-Year Price Determination (MYPD) pricing methodology will be ending on the 31st of March 2022, which implies that a new or revised methodology is required. NERSA published a consultation paper to determine a new price determination methodology in September 2021, which FSA will be engaging on.
Agriculture only uses 2.8% of the total energy mix produced by ESKOM but was the one sector to increase energy usage the most! From 2012 to 2021 Agriculture increased energy consumption by 6.4%, residential users by 4.6% and commercial users by 4.1%. This while Rail, Industrial and Mining usage has declined -40.9%, -30.3% and -17.2% respectively. The impact of cable theft can be clearly seen on the Rail energy usage! Rail however remains a very small user in the total energy mix using only 1%. The biggest user of electricity (43%) is Municipal distributors, and here the culture of non-payment and poor management is withholding funding from ESKOM who have raked up massive debts of over R400bil!
FSA’s commercial manager, Dr Jack Armour, who is presenting at the hearing says ”the massive elephant in the room is not just the NERSA pricing structure which has allowed ESKOM uncontrolled spending, but also the massive debt burden ESKOM has been allowed to rake up and which needs to be serviced!” The R131Bil promised by first-world countries to South Africa at COP’21 on the weekend to restructure SA’s
energy mix, will barely cover a quarter of ESKOM’s massive debt. Furthermore, SA through ESKOM has officially become the highest polluting country in the world in terms of Carbon Monoxide emissions! Just to clean ESKOM’s dirty power generation alone is costed at over R30 Billion.
At the hearings FSA wants to make a strong case not to overcharge the agricultural sector who are already paying a split tariff – the average farming household who gets power directly from ESKOM pays a service and network capacity charge of over R2 500 per month for a small transformer even before he/she has started using any power.
FSA is also totally against the court case that SALGA (SA Local Government Association) has launched against private energy distributors, which includes the Damplaas Kragbron distribution network belonging to the farming community of Petrus Steyn in the Free State, which is privately funded, maintained and very efficient. The Municipalities want to take over all distribution and retail of ESKOM power wall-to-wall within their boundaries and not just too residential areas as in the past.
Free State Agriculture will stand against such socialistic systems of central control and fight for the free market economic principles that grow economies and promote transparency and efficiencies.