Eskom’s proposed 66% price increase over the past next? three years has raised concerns, with the Organisation Undoing Tax Abuse (OUTA) criticizing Eskom for inefficiencies and calling for a more rigorous approach to operational savings to ease financial pressures on consumers and distributors alike.
The rising cost of purchasing electricity from Eskom presents significant challenges, including concerns over financial sustainability, infrastructure investment, and reliable service delivery. As NERSA prepares to make a decision on Eskom’s revenue requirements, the outcome will directly influence the cost burdens passed down the supply chain.
OUTA has been vocal in its opposition to Eskom’s pricing application, pointing to inefficiencies within the utility. Estienne Ruthnam, OUTA’s Senior Project Manager, has emphasised that Eskom’s reliance on tariff increases, rather than operational improvements, exacerbates financial pressures. “South Africa cannot afford this,” Ruthnam argues.
In response to Eskom’s proposed price hikes, OUTA has recommended several measures to mitigate the financial impact. These include urging the power utility to prioritise cost-cutting measures over price increases. OUTA also calls for NERSA to push Eskom toward greater operational efficiency, including reducing staffing, maintenance costs, and energy procurement.
OUTA advocates for a transition to renewable energy, urging NERSA to support Eskom’s shift toward affordable sustainable energy sources. They also recommend independent oversight of Eskom’s financial practices, including commissioning studies to assess Eskom’s socio-economic impact, staffing levels, and asset valuation. OUTA believes that reducing internal inefficiencies and increasing transparency will allow Eskom to achieve financial sustainability without imposing steep price hikes.
However, Eskom defends the proposed price hikes, arguing that they are essential for maintaining the operational integrity of the electricity grid.
“Financial sustainability is necessary to ensure reliable electricity delivery, with rising energy costs, ageing infrastructure, and procurement from independent power producers driving the proposed increases,” the power utility told Energize, and also highlighted affordability measures, such as free basic electricity for low-income households, to mitigate the impact on vulnerable groups.
OUTA, in addition to advocating for operational efficiency, stresses the need for Eskom to reduce its reliance on fossil fuels and accelerate the transition to sustainable energy sources. This shift, according to OUTA, could support Eskom’s long-term financial stability while potentially reducing price hikes for consumers.
