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
Editor
SECCP

Read the rest (pdf) here.

Press Release: Resistance Against Unfair Tariff Hikes Grows

I'll post some pictures soon (I hope).

Press Release: Resistance Against Unfair Tariff Hikes Grows
Earthlife Africa Jhb, Anti-Privitisation Forum
21st of April 2008

On the 23rd of April 2008, approximately 2,000 members of the Anti-Privitisation Forum (APF), Earthlife Africa Jhb (ELA Jhb), the Landless People's Movement and The Greenhouse will be hitting the streets in Johannesburg to protest against Eskom’s proposed and unjust tariff hikes.

The march will begin at Library Gardens at 10am, moving to City Power (Jorrisen Street) and then to Eskom (Smit Street). In addition to this protest in Johannesburg, protests will take place in Pretoria (to DME and NERSA), Durban and Cape Town on the same day.

These events will be preceded by pickets on Tuesday (22nd of April) in Pretoria (DME & NERSA), in Johannesburg (Eskom & DME) and the Vaal (Eskom). All of these pickets will commence at 10:00am, please contact APF Organiser, Silmuko Radebe (see below) for more information.

The proposed tariff hikes of 60% in real terms will negatively affect the living standards of poor households and will be at odds with efforts towards poverty reduction. Eskom will be placing a burden on consumers who cannot already afford electricity. Despite the Government and Eskom’s repeated boasts about electrification, 30% of South Africans are still without electricity. Of the 70% who do have electricity, many poor users suffer from disconnection. Furthermore, users of prepaid meters disconnect themselves (due to lack of funds to feed the meter), thus transferring the onus of disconnection from the state to the citizenry. The Free Basic Allocation of 50kWh a month per household is widely regarded to be inadequate; 50kWh doesn’t stretch that far between six to eight people.

APF Organiser, Silumko Radebe, states that, “The restructuring and preparation for the privatisation of ESKOM has led to the present crisis. Following the dictates of GEAR and ASGISA and the Washington consensus that gave birth to the neoliberal policies, the energy sector was opened to foreign investments through privatisation and deregulation. The motivation for restructuring Eskom was that there is a need to introduce competition into electricity provision. Eskom was, therefore, broken up into its generation, transmission and distribution divisions and corporatised. The current crisis is borne of these efforts to create a power market where scarcity of energy resources ensures a ‘competitive environment’ and profitability for the generators and distributors of electricity. The restructuring of the distribution division set up regional electricity distributors (REDs) that would be financially and organisationally independent of one another and the state. In other words, electricity is treated as a commodity rather than a public service.”

A social ill will only be increased by the proposed tariff structure. In response to rising electricity prices, many poor consumers will turn towards alternative energy sources such as paraffin, coal, and biomass. This will have enormous financial and social consequences: For example, in 2000, there were 46,000 paraffin fires, 50,000 paraffin burns, and at least 4,000 children died from drinking paraffin. The total cost to the economy of paraffin related incidents is R100 billion a year. Our children are being physically scarred for life or are dying because Eskom refuses to supply adequate electricity to its poorest and most marginalized citizens.

This move of Eskom’s is surprising and foolhardy. There exists a set of reforms, which if implemented, can alleviate the power crisis and the lack of access crisis that besets this country. They are:

1) A step-block tariff with a free basic allocation of 100kWh per person per month.
2) The opening up of Eskom’s secret contracts with large-scale users and tariff increases on the 25 companies that consumer 40% of our electricity generated.
3) The scrapping of subsidised electricity for foreign corporations under the Developmental Electricity Pricing Programme, and, in particular, the Alcan contract.
4) The abolishment of pre-paid metres.
5) The reorganisation of Eskom within the state so that it operates as an agent of social construction and not a profit-making business.
6) Investment in renewable energy instead of the costly fossil fuels of coal and uranium.
7) No member of Eskom management shall be paid a bonus.

Tristen Taylor, Earthlife Africa Johannesburg’s Energy Policy Officer, states, “As much as electricity tariffs needs increase to address infrastructure maintenance needs, the proposal from Eskom is either vague or at odds with endeavors for poverty eradication. It is of utmost importance that Eskom addresses the issue of indigent users access and affordability of electricity supply and unless Eskom adequately addresses its electricity-generation strategy that is at the heart of its long-term financial ill health, Eskom’s proposals should be rejected by NERSA.”

For more information, please contact:

Tristen Taylor
Energy Policy Officer
Earthlife Africa-Johannesburg Branch
Email: contrarytoauthority@gmail.com

Silumko Radebe
Organiser
Anti-Privatisation Forum
Email: khethokuhle@gmail.com

Press Release: Electricity is a right and the poor must have access to clean, alternative energy. South Africa needs democratic control of energy for

Press Release: Electricity is a right and the poor must have access to clean, alternative energy. South Africa needs democratic control of energy for all!
Anti Privitisation Forum
20th of March 2008

The issue of electricity in South Africa, in particular with ESKOM, is about the generation and distribution of electricity in Africa. As indicated in our country’s Constitution (in the bill of rights) electricity is a right. ESKOM has an attitude that electricity is a privilege not a right hence the ridiculous tariff increment of wanting to charge more than 53%. The Anti Privatisation Forum is condemning this increase and it is mobilising its constituencies against this proposed increase. This comes after ESKOM last year proposed an 18% tariff increase and the National Electricity Regulator of South Africa granted a 14% increase. The recent electricity black-outs in the country has promoted a public debate around the issue of the consumption of energy but have ignored the main source of the problem. The Anti Privatisation Forum (APF) has been struggling for the past eight years to ensure that poor communities have access to basic free electricity and that the poor are aware of their constitutional and human rights in attaining this service.

Many of our people in the country are unemployed and live below the poverty line. It is a fact that at least 50% of the population has become worse off since 1994, with most struggling to survive on a daily basis. Many of our constituencies have been living in squalid conditions where they have no roof over their head, use coal & paraffin for fire, candles for studying at night and little or no access to water & sanitation. Despite recent reports from the government on achieving their targets, many communities (Kliptown, Boiketlong, Kwa-Masiza, Tembalihle, Protea South, Khayelitsha QQ residents, Joe Slovo, Ikageng, Delft, Kennedy Road & Crossmoor) and many more informal settlements are at a disadvantage and have lost hope. Around 30% of South Africa’s population has absolutely no access to electricity, while many more than do have access will not be able to afford the proposed tariff increases.

The recent noise about load-shedding in the country is because big-business has been affected (where some have been forced to run their operations at 90-95% capacity). This has been viewed as a problem because it will affect production and decrease profitability resulting in a decline in the country’s economic growth. Even louder noises have been made that this will result in job losses and investors will be scared to risk their investments in the country.

WHO IS TO BLAME?

It comes as no surprise that ESKOM CEO, Jacob Maroga, who recently met with 131 business executives from the ESKOM’s top 38 industrial and business customers in Midrand to discuss solutions to the power crisis, consciously excluded community and social movement organizations. Agriculture and the business sector combined get 83% of all electricity while the citizenry must scavenge for the remaining 17%. Then we wonder why the community is told to sleep early, switch of the geyser, use light saving bulbs, report illegal connections (“izinyoka”) and utilise less electricity during peak hours when they only use 17% of electricity. But also the message is directed to the poor who use minimal amounts of electricity as compared to the rich who have Jacuzzi’s, warm swimming pools, air conditioners, under floor heaters and many other electricity-eating gadgets. But this is not the point, we can’t compare this consumption to that of big business who clearly are being given first preference by ESKOM in terms of pricing policy. While big business is being provided electricity at less than 15 cents per kilowatt/hour, poor rural residents have long been charged 48 cents per kilowatt/hour. During recent power cuts, we have seen President Mbeki saying that it is a national crisis and all must play a role in taking equal responsibility for the crisis – we agree, there is a crisis, but it is not poor people who should bear equal burden for that crisis. The APF backs the call of the Congress of South Africa Trade Unions (COSATU) for ‘civil society’ to be part of the Electricity Forum – the voices of the poor must be heard.

The main sources of energy consumption/use in our modern lives are petroleum, natural gas and coal - all fossil fuels which are diminishing and with few/no alternatives energy sources in mind. In addition, ownership and control of present energy sources is monopolized by a few corporates and ultra-wealthy individuals. In South Africa, the government is responsible for producing 90% of the country’s electricity output, mostly all through coal-fired power stations. The additional 5% comes from nuclear-generated power (Koeberg) and hydro resources. This means that our government, through ESKOM, has the sole discretion as to how to distribute electricity output – and we can all see what decisions that have taken (agriculture gets 3%, commerce gets 10%, transport gets 2% and industry, a whopping 68%). The government’s macro-economic policy -GEAR – provides the overall framework for such choices of electricity distribution.

A classic example of this is the recent ALCAN-Coega deal with ESKOM that was signed on the 24th November 2006 (but which has since been delayed). The proposed Alcan-Coega aluminum smelter requires 1300MW of coal-generated power, enough to supply a small city, with Alcan only paying 0.02 to 0.06 cents per kilowatt/hour. What this clearly reveals is that there is no democratic process in decisions regarding electricity generation, distribution and pricing.

ALTERNATIVE ENERGY

The only long term solution is to address both the environmental and human justice concerns, as part of addressing the political economy of energy/power. One of the factors that most all are agreed on, is that there are major socio-economic inequalities in South Africa. For example, poor people have been, and to a lesser extent continue to be, deprived of quality education and thus of the possibilities of being able to learn about the political economy of energy. Issues of energy have to be taken down to the community level. In the APF local government electricity platform we have clearly outlined our demands and alternative sources of energy. Addressing the immediate nature of the present crisis and its anti-poor ‘solutions’, requires a change in the distribution policy of ESKOM and government, reduction of electricity cut-offs, lower residential tariffs (especially for the poor) and an increase in the life-line allowances.

We need to be clear that there is no shortage of energy. There are existing alternative energy sources/ technologies (solar, wind, biogas etc.) and there are also methods of using energy with much greater efficiency, which have the potential to change the political economy of power. Moving forward on this front is going to require public sector/state support and subsidisation - especially for further research and development. We need to decentralise the generation of electricity to the local level of municipalities, town villages and households. Wind and solar energy provide two of the potentially best alternative sources, because they are free to all and they can’t be controlled by a few. Individual citizens and communities must have the ability not only to set their own electricity requirements but also to meet their own needs. People must have direct control of the electricity sector.

As the APF we say:

Forward to democratic control of renewable energy for all!

For more information please call Silumko Radebe (APF Organiser) @ 011 333 8334; Patra Sindane (Coalition Against Water Privatisation) @ 011 333 8334 Also contact Tristen Taylor (Earthlife Africa) @ 011 339 3662

Earthlife Africa Welcomes Delay of Alcan Smelter

Press Release: Earthlife Africa Welcomes Delay of Alcan Smelter
Earthlife Africa Jhb
17th of March 2008

In this time of electricity supply crisis, the reported (SABC, 17/03/08) construction delay of the Alcan smelter at Coega is to be welcomed as a first step towards a rationalised electricity supply and distribution system.

For over two years, Earthlife Africa Johannesburg has been campaigning against the sale of bulk electricity to Alcan at low tariff rates. In late 2006, the Government & Eskom signed a host of deals with Alcan under the Developmental Electricity Pricing Programme (DEPP). These deals ensured Alcan 1350MW of power (enough to run a small city) at low rates. The estimated special tariff for Alcan is 12c/kWh.

While the details of these deals remain secret—due to dubious confidentiality clauses within the DEPP policy—delaying construction of the proposed smelter gives the Government the time to scrap the DEPP. This will enable the Government to replace the DEPP with an open, transparent policy on industrial electricity supply that will ensure industrial customers meaningfully contribute towards paying for the expansion of Eskom’s generating capacity.

In particular, the time has come to ensure that Eskom increases the generation of electricity from renewable resources, in particular Concentrated Solar Thermal, and that the tariff system is brought into line with the new realities.

Earthlife Africa Jhb believes that as commodity prices rise over the next five years (oil, coal, natural gas, and uranium) and as South Africa comes under increasing pressure to cut CO2 emissions, South Africa will have to transition away from fossil fuels and towards renewable forms of energy.

Government policies like the DEPP prevent this. The underlying assumption behind the DEPP and the subsequent Alcan deal is that the Apartheid system of providing heavy industry with dirty, cheap electricity from coal-fired power stations is applicable in the 21st Century. This is not the case. South Africa cannot afford the Apartheid-style of electricity system under current global energy trends.

However, the converse is also true. South Africa can afford to invest heavily in an industrial plan to design and manufacture renewable energy technology. Only last week, the Centre for Renewable and Sustainable Energy Studies in the Western Cape announced the possibility of generating 10,000MW of electricity from wave power alone.

Our national resources should be invested in promoting this kind of research and development. Showering tax credits and cheap, polluting energy on foreign users in return for very few jobs is an economic model best left in the 1980s.

For more information, please contact:

Tristen Taylor
Energy Policy Officer
Earthlife Africa-Johannesburg Branch

Editorial on SA Energy News

March Editorial on SA Energy News

Two issues of SENSE (#47) ago, SENSE warned about the coming global shortage of petroleum. Those who still don’t believe have yet to fill up their gas-guzzling four by fours; bigger shocks ahead folks, like the possibility of petrol going to R10 a litre in the near future.

The peak of oil production is not alone; the coal price is going through the roof with the price of thermal coal tripling in the last year, while the price of coking coal doubling over the same period. This has prompted Eskom to call for another round of tariff increases.

The collective belt tightening that Eskom management calls for does not extend to their own corporate bonuses; maybe the top execs need the extra millions to pay for the increased power costs of running their mansions, swimming pools and ten-metre plasma TV screens.

Which brings us to the Eskom approach to domestic tariffs in general; a.k.a. the sledgehammer approach. Eskom raises tariff prices with barely a nod of the head to South African’s social and economic conditions. Fifty percent of the population lives in poverty, and can hardly meet their nutritional requirements, let alone the municipal electricity bill. Without employing the insanely revolutionary, utterly insurrectionary and wickedly irresponsible tactics of an increased free basic allocation and a step-block tariff, Eskom’s tariff increases will squash any hopes of eradicating poverty this side of the new millennium.

Turning to one of the SECCP’s favourite topics—the proposed Alcan smelter at Coega—it seems that it is only Cabinet and Alcan that are in favour of the actual smelter and its fantastic consumption of electricity at low, low rates. Veteran energy analyst Andrew Kenny stated recently that, "SA's number one thing for investment was cheap power. We have lost that. The Coega smelter must be scrapped."

On the nuclear side of things, Patrick Moore has been in South Africa touting his Greenpeace credentials (he says he’s a founder) and punting the joys of reactors, cost overruns, nuclear proliferation worries, and the long-term health benefits of nuclear waste. Here’s what Greenpeace has to say about its self-declared founding fathers:

“Patrick Moore was one of the people involved in sailing the ship 'Phyllis Cormack' to Amchitka to protest planned US nuclear weapons nuclear tests in 1971. However, his claim to be a Greenpeace co-founder is untrue. The initiative against those nuclear tests began in 1969, and only two years later did Moore send a letter in which he introduced himself as a student and asked if he could join.

“Since leaving Greenpeace in 1985, Moore has been a paid propagandist for a number of polluting industries, including: defending clear-cut logging of forests in British Columbia, downplaying deforestation in Amazonia, supporting controversial mining projects, and promoting genetic engineering. On some occasions he has even been in the Climate Sceptic camp.”

The good news is that scientists at the Centre for Renewable and Sustainable Energy Studies might have found a way to generate 10,000MW of electricity from wave power alone.

We have alternatives to fossil fuels.

Tristen Taylor
Energy Policy Officer
SECCP
Earthlife Africa Jhb

Read the entire newsletter here.