Presentation to NERSA on ESKOM tariff application 5 February 2016

Transcription

1 Presentation to NERSA on ESKOM tariff application 5 February 2016

2 Why all here? Will it really help? Hope Confidence that NERSA will actually consider our concerns and let it find expression in the tariff to be approved for ESKOM & Municipalities as licensed distributors, subject to license conditions Our view, experienced from perspective of electricity consumers of Rustenburg We are hoping, recently against hope! The role of NERSA versus the role of the Municipal Council is not understood by municipalities Municipalities seem to be confused Who has the final say on tariff increases? Councils say it is NERSA, as they blame NERSA when challenged by consumers

3 Our experience: Since first 35% in 2008 Increase to ESKOM: 35% Increase allowed to municipalities: 35% Was wrong implies every cost driver increased by 35% NERSA subsequently changed. 2015/16: Granted to ESKOM: 14.4% 2015/16: NERSA guideline tariff increase to municipalities: 12.2% However, 35% adjusted retrospectively? NO!

4 Rustenburg consumers - Our experience: 2012/13 Implementation of block tariffs not even tabled before Council in March or May First word after NERSA approval Reason supplied to consumers: NERSA said so! Implied tariff increase of 20.25% on 1000 kwh. Was implemented without even one budget calculation by RLM Engaged with NERSA. Did it help: NO! NERSA s plea following engagement: We will not do it again!

5 Rustenburg: Business (400 V) tariffs (Consumption based portion) (VAT exclusive) 8000 kwh in 2007 (R0.16/kWh) 8000 kwh in 2015 (summer) (R /kWh) 8000 kwh in 2015 (winter) (R1.90/kWh) 8000 kwh in 2015(average) (R0.9602/kWh) Average increase between 2015 and 2016 Increase in winter months Increase/month since 2007, based on average Increase in % Average increase/year (%) Comparison: Toll gate fees If now (2016) costs Will cost in 2024 if same trend applicable R R R R % % R % 62.47% R R107.96

6 Rustenburg: Household tariffs (VAT inclusive) 1000 kwh in kwh in 2015 Increase in R Increase in % Average increase/year Comparison: Bread If now (2016) costs Will cost in 2024 if same trend R R R % 35.24% R R 38.19

7 Rustenburg - Our experience: 2015/16 Seasonal tariff increases for business : 199% Calculated over a year: 38% Rustenburg economy: Platinum industry driven / AMCU strike / Marikana Mines shedding positions like ESKOM shedding load Local economy suffering Amidst this with the approval of NERSA: Taking two thirds of approved annual tariff increase upfront in July and August. Which business charge July/August clients the annual price increase, but the subsequent clients no increase? With NERSA approval? Does it instil confidence in NERSA NO! NERSA engagement: Reduces 27c/kWh to 0.27c/kWh Did the RLM adjust retrospectively: No Were consumers afforded an opportunity to be heard on the increase above 12.2%, as is the prescribed NERSA procedure (like this): NO! NERSA s comment: We will not do it again! Will electricity consumers have confidence in NERSA: No!

8 Process ESKOM application Public hearings NERSA consideration NERSA caps ESKOM increase NERSA determines tariff guideline increase for Municipalities Municipalities submit applications. Limited municipal capacity Municipal own calculations mostly none - just based on NERSA increase Application considered time frames important. Section 43 MFMA / NT guideline Council draft budget to public. NERSA approves different tariff. Council has to go back to public. Do they do it? Mostly NOT! NERSA should engage with public if > than tariff guideline increase

9 Debtors/municipalities not paying Media: Soweto consumers owe ESKOM R4 billion Municipalities owe ESKOM R5 billion. ESKOM providing bridging finance to non-paying municipalities? All knows: Non-collection finds expression in tariffs somebody must pay for the non-payment! Who are they? Law abiding consumers like us Municipality do not pay ESKOM. ESKOM cut supply to town. Who suffers: Law abiding consumers who paid. Are the Council dissolved? No! Are the MM and/or CFO fired: No! Are the conditions of the license agreement enforced/license of the municipality withdrawn: No! Are ESKOM allowed to cut supply to town: Yes! Who should now protect the law abiding and paying residents/electricity consumers?

10 Distribution losses Distribution losses filtered into tariffs Norm set by National Treasury: 8% Electricity distribution losses exceeds norm in Rustenburg Totally unacceptable, yet 38% tariff increase approved by NERSA! What does it imply? Poor leadership and management find expression in increased tariffs Law abiding consumers pay for inefficiencies! Any repercussions: No! Who suffers?: The law abiding paying consumer

11 Conclusion Under NERSA s nose, on their watch, electricity consumers of RLM pay today between 288 & 499 % more for electricity than in 2008 and if challenged: NERSA approved! Implies: On average an increase between 35% and 63 % per year Reported inflation of between 5 & 6 % Economic growth of not even 2% predicted for 2016/17 Yet: ESKOM has the audacity to ask for 17%, blaming previous requests for increases not granted, in a market where it has no competitor Can Sunbake, who bake and sold the bread in 2013, recoup from a different consumer the increase that he could not filter into his tariffs then? We are paying for inefficient management at ESKOM and Municipalities - finding expression in tariff increases, allowed by NERSA and claimed by Municipalities as the final authority they do what NERSA say Yet: Ethekweni no block tariffs

12 Munsolve s request to NERSA Consequence management: At NERSA, at ESKOM, at Municipalities Currently only consequences for business/households they must pay, adapt lifestyles, cut back on other expenses or suffer disconnection of supply, yet senior managers at NERSA, ESKOM and Municipalities seem to be remunerated at above average salaries Every business in SA suffered the consequences of load shedding how many senior managers and Board members at ESKOM were held accountable? Do not allow the ESKOM increase applied for let them do what all of us were forced to do cut back and become more effective, efficient & economical. Review license agreements of all muni s, first non-paying municipalities. There must be consequences for a Council/Municipality that do not pay ESKOM Insist, as license condition: Municipal tariff calculation submitted with detailed working papers to Council and included as part of public participation during budget process Clear cut role differentiation between NERSA and Municipalities on tariff determination and tariff approval

13 Leaders are dealers in HOPE Munsolve call on NERSA to bring HOPE, based on integrity, to electricity consumers! Without a process that we can believe in, the integrity of the process is tarnished, which will eventually find expression in PROTEST, as the voice of the UNHEARD! Thank you Baie dankie Ke a leboga Obricado Siyabonga