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Wednesday, May 21, 2008

Tariffs and Treachery

Editorial on SA Energy News: Tariffs and Treachery

The National Energy Regulator of South Africa (NERSA) will hold a public hearing on Friday (23/05/08) on the proposed Eskom tariff increases. The SECCP will be there, as will 200 community members from Soweto and Soshanguve, demonstrating against Eskom’s unwise, ill-timed and anti-poor price increases.

This Special Edition of SENSE carries our submission to NERSA instead of the usual press reports.

The case against Eksom’s proposed tariff increases has a few key components: First, the tariff increases do not adequately protect poor consumers and will bring new hardships to communities already struggling for mere survival. This could be avoided through the implementation of a step-block tariff and an increase of the Free Basic Allocation to 100kWh per person per month.

The second main reason to reject Eskom’s tariff increases is the unwise financial planning that structures the increases. By committing itself to a new build programme of coal and uranium power sources, Eskom is effectively locking the entire country into a fossil fuel economy for the next fifty years. Within ten to fifteen years, the costs of solar and wind generation per kWh produced will be below that of coal and uranium, mostly due to the long-term rise of coal, uranium, gas and petroleum stocks. As previous editions of SENSE have pointed out, these fossil fuel commodities are finite, dwindling, and increasingly in demand. An economic genius one needs not be to understand the long-term price implications.

The third reason is that Eskom has failed to show any meaningful commitment to cost-cutting measures; the ten million rands in bonuses to top management (who have managed to get coal stockpiles horribly mixed up, invested money in financial instruments instead of maintenance, and have cost the country billions through some bizarrely-timed blackouts) would be a great place to start.

The final reason is that the Developmental Electricity Pricing Programme (DEPP) and the related Alcan contract remain on the books. It is economically unsound, socially evil, and environmentally ill-conceived to provide power subsidies to a foreign corporation with minimal job creation while raising prices on the rest of South African society. In effect, why should South African citizens and small businesses have major price increases while foreign corporations are guaranteed profits through artificially low prices?

Speaking of the DEPP, SENSE must make mention of a recent agreement between Rio Tinto Alcan and the Endangered Wildlife Trust (EWT), the Zwartkops Trust, the Wildlife and Environment Society of South Africa (WESSA) and the Wilderness Foundation. Apparently, these so-called environmental organisations have agreed to welcome in and work with a corporation that was forced out of India by activists, and has laid economic ruin upon the Canadian town of Kitimat. In the name of environmental and social justice, these organisations are willing to essentially build a new coal-fired power plant to service Alcan’s proposed smelter. In the name of combating global warming—a hotter and drier Africa will negatively affect the critters these organisations are committed to saving—they are willing to increase South Africa’s CO2 emissions. Oh thank you, you fine environmental organisations. Thank you for listening to local environmental activists like the Nelson Mandela Bay Local Environmentalists (NiMBLE), who have been campaigning against Alcan for over a year.

Further, EWT, the Zwartkops Trust, WESSA, and the Wilderness Foundation have accepted Alcan and the Government’s penchant for secrecy surrounding aluminium smelting. Article 10 of the MOU signed between these organisations and Rio Tinto Alcan states, “…members are expected to refrain from public comment regarding internal debate and deliberations of the NMBCAEA [Nelson Mandela Bay Coega Aluminium Environmental Alliance]…”

That’s it for now. I have to attend to my sore and bleeding back….

Tristen Taylor

Read the rest (pdf) here.

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