BUSA expresses concern over frequent electricity tariff hikes

The Energy and Environment Director at Business Unity South Africa (BUSA) Happy Khambule has expressed concern over the frequent increases in electricity tariffs.

Khambule suggests that these increases send a negative message internationally about South Africa’s control over its electricity pricing policy.

Eskom has proposed a 36% electricity tariff hike, prompting BUSA to warn that continuous cost increases may drive companies to seek alternative ways to cut costs or find regions with lower electricity rates.

Khambule emphasises the need for Eskom to focus on cost recovery, particularly from unpaid electricity debts, rather than burdening those who can pay.

“We think that if there is no cost accounting and cost recovery that is done in the right way you gonna put pressure on those who can actually pay. And that’s what is happening at the same time. And then we had to really re-look this issue around cross subsidisation cause some of these costs are failing because we have got cross subsidisation for parts of the electricity systems that no longer apply…”

Khambule also highlights issues with cross subsidisation, noting that it contributes to the rising cost of electricity, even though some of these subsidies no longer serve their original purpose.

“As a result of that we still have cost pressures that are increasing the price of electricity and yet they no longer actually fit the purpose in terms of the cross subsidisation complement of the electricity price that we are paying,” Khambule adds.