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Unaffordable ESKOM tariff increase threatens food security

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In the midst of highly unreliable service delivery, ESKOM is allowed to increase their rates by 18.65% from 1 April 2023 and a further 12.74% from next year! “This is highly unaffordable and amounts to daylight robbery” says Kempen Nel, irrigation farmer and chairman of Free State Agriculture (FSA)’s Commercial Affairs Committee.

Municipalities who owe ESKOM billions (R56bil – the largest part of which comes from the Free State!) remain the biggest culprits, but are also allowed to raise their resale charges on ESKOM power by the same %. This is a further death blow for already struggling residents in rural areas. FSA through Agri SA, as a friend of the court, is against SALGA’s court application that municipalities must become the resale service providers in rural areas where ESKOM already sells power directly to farmers.

FSA in its submissions to NERSA have long warned that the threshold for switching to alternative energy sources have been reached for rural households and nonenergy-intensive farms. Furthermore, a massive amount has been spent by farmers on back-up energy solutions where energy cannot be switched off for long periods of time, such as safety devices or milk tanks, warehouse cold rooms and processed meat freezers, etc. that need to cool so that food can be kept fresh and healthy throughout the food value chain for the consumer. Farmers remain price-takers and the increases in unplanned forced expenses prevent investments in new technology and equipment to make farming more effective and sustainable, as well as food more affordable.

ESKOM’s distribution network costs did not increase significantly, but the increase was also allowed on the fixed cost component of an ESKOM account, which FSA has also been complaining about for a long time. The fixed cost for an ordinary farm house homestead’s line fee is already more expensive than the instalments for a 5kVA alternative energy solution. So ESKOM only loses more good and paying customers and goes further down the so-called “downward utility spiral”.

Increasing ESKOM unreliability especially affects irrigated farming at a critical maximum growth period when irrigation must be done at night – solar power can be used during the day, but the batteries to store alternative energy sources, or ESKOM’s own power, for when it’s needed remain uneconomically unaffordable. “On top of the ridiculous cost increase for power, the unreliability of power supply is another big red flag for food security” said Nel.