Kevin Mileham of the DA addressed Parliament, criticising Eskom's proposed 40% electricity tariff hike and highlighting the financial burden on South African taxpayers. File Picture: Danie van der Lith / Independent Newspapers
Kevin Mileham of the Democratic Alliance highlighted that South African taxpayers are effectively paying twice for Eskom's financial woes.
South Africans are shivering through cold weather, relying heavily on electricity for heaters. Yet, amid this chill, the news of Eskom’s impending tariff hike - set to rise by up to 40% in 2025 - has sparked outrage.
Just as people across Mzansi seek relief from the biting cold, they are now faced with the prospect of paying significantly more for electricity.
A day after the Democratic Alliance (DA) led a national protest on September 18, different political parties gathered in Parliament on Thursday, September 19, to debate Eskom's announced tariff increase.
In August, Eskom proposed the hike, which includes a 36.15% increase, with an additional 4% approved by the National Energy Regulator of South Africa (NERSA), pushing the total hike to over 40%.
ActionSA Member of Parliament, Malebo Kobe condemned the increase during the urgent parliamentary debate.
"These combined increases will further devastate already struggling households, making basic electricity an unaffordable luxury for millions."
Kobe called for immediate reforms to improve Eskom's operational efficiency and decentralise the energy market to reduce the monopoly on electricity supply.
The Economic Freedom Fighters (EFF) also voiced their opposition. EFF MP Nazier Paulsen highlighted the particularly high electricity tariffs in Cape Town, noting: "The additional service charges in Cape Town are a financial burden, disproportionately affecting poor families who must choose between basic needs like food and electricity."
Paulsen accused the City of Cape Town of implementing unlawful hikes beyond what NERSA approved, claiming the City was profiting from the energy crisis at the expense of its residents.
Additionally, the African National Congress (ANC) joined the opposition, rejecting Eskom’s request for a tariff increase. The ANC emphasised that the proposed hike was unacceptable, calling for the matter to be thoroughly debated in Parliament.
This move follows after the DA's strong opposition to the hike announcement made by Eskom, leading them to implement several measures against it.
A petition against this matter has been issued by the DA, and it already has over 100,000 signatures, and earlier this week, DA supporters protested in the streets in all nine province.
MP Kevin Mileham, representing the DA, presented a statement in Parliament, opposing Eskom's proposed tariff increase.
Mileham emphasised that electricity prices in South Africa have surged by more than 945% in the past 17 years, significantly outpacing inflation.
“To put this in perspective, an average household using 350 kilowatt hours of electricity in 2007 would have paid just R69.30. Today, they are paying R724.50, and Eskom is requesting an increase of between 36% and 43% on top of that. So, that same household can expect to pay more than R1,000 this time next year.”
Mileham pointed out that a petition against the proposed price increases has over 100,000 signatures from South Africans.
Despite the resistance, NERSA has given Eskom the go-ahead to recuperate R8 billion through the Regulatory Clearing Account (RCA).
Mileham expressed disapproval of the RCA, stating that it fosters inefficiency at Eskom by enabling the utility to make up for financial shortfalls by increasing charges to its paying customers.
He also expressed concerns about Eskom’s overvalued Regulatory Asset Base (RAB), estimating it is inflated by R500 billion, partly due to cost overruns and corruption at the Medupi and Kusile power stations.
“An example of this is the corruption and cost overruns of Medupi and Kusile, which ran R154 billion and R146 billion over budget, respectively. These overruns have been attributed to various factors, including design flaws, corruption, and delays, in other words, Eskom inefficiency.”
Mileham pointed out a contradiction in NERSA's announcement about its intention to remove inefficiencies from tariff-setting, while it aimed to eliminate these inefficiencies, it also stated that debt servicing costs from those inefficiencies would still be included in the price determination.
He emphasised that customers bear Eskom's R400 billion debt due to its internal issues, which increases the financial burden on taxpayers.
"It's a well-known fact that Eskom carries approximately R400 billion in debt, and it is the customers who are paying the costs of that, even when Eskom’s own internal issues caused the problem in the first place. Over the past 10 years, Eskom has received approximately R242 billion in bailouts from the national government," he said.
Moreover, Mileham pointed out that taxpayers are essentially paying twice, first through bailouts and again through higher electricity prices.
“This means that taxpayers are paying twice for Eskom’s poor decisions. First, they pay in the form of bailouts, and then they pay again when they buy their electricity,” he said.
Mileham also addressed claims that renewables are responsible for rising costs, calling them misleading.
While early renewable energy projects were more expensive, he noted that electricity from renewable sources in more recent projects had become cheaper than coal.
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