The (NERSA) National Energy Regulator of South Africa, has just been given approval to clawback R13.3 billion rand from the (RCA) Regulatory Clearing Account for the 2018/19 year.
This is still way short of the R27.3 billion that Eskom actually indented for. What it means is that although actual tariffs (with NERSA’s approval) are being raised at almost twice the rate of inflation, this is still way nore than what Eskom is pushing for, which has been consistently in the 20 percentiles and higher.
In real terms two ‘small’ single digit increases actually equate to a lot more, but it makes it easier for a very disgruntled consumer base to absorb this appearance of a low increase.
Let us keep the math fairly basic. lets have two increases in a year, lets make the first one at 8% of a baseline of R100 that makes R108. Later on we decide we need another increase but at a more palatable 5% (before we have more riots but this time from the bulk of middle class consumers, who are the bread and butter of the diminishing tax base). Now we are paying R113.40.
The actual increase is 13.4% (not the 13% the two increases add up to. It is compound interest working against you, and thats how you suddenly wake up and realise that you have been abused by the powers that be.
The only real difference between the failure of SAA and of Eskom is that there are already many alternatives to SAA. Until the recent advent of highly accessible and cost effective renewables, there was no alternative to Eskom.
Eskom is in no different place to SAA. We do need those coal plants for now, but their usefulness is fast running out. The generation division has been a white elephant for years now and we are simply throwing good money after bad. Mr de Ruyter is very keen to rid this monkey off his back and concentrate on the other two divisions which make a lot more sense in the future of energy around the world: transmission and distribution. We already have the capacity to let current solar users everywhere feedback into the grid, the political will and intelligence just does not exist to let this happen.
The economic damage suffered by the vast paying base, will also wreak havoc on Eskom’s recoveries!
Take the plunge, invest in solar, early adopters have long since being smiling.