This past week, Executive Mayor of Johannesburg, Herman Mashaba wrote to the Chairperson of the National Energy Regulator of SA (NERSA), Mr Jacob Modise, in which the City registered its opposition to Eskom’s proposed electricity tariff hike. NERSA is currently considering the proposed tariff increase.
Mashaba called the proposed 15% increase over the next three years “unacceptable”, citing “the profound impact it will have on the livelihoods of our residents, and the businesses operating in our City”.
He wrote: “The Reserve Bank’s Monetary Policy Committee’s January 2019 statement indicates that inflation is expected to average 4.8% in 2019, 5.3% in 2020 and 4.8% in 2021. A price increase of more than 10% above inflation, on the back of a 500% increase over the past 11 years, will increase the cost of living for the City’s residents and place a strain on much needed economic development in Johannesburg.”
Johannesburg accounts for 15.2% of South Africa’s GDP and 13.1% of the country’s employment.
The City has not been immune to the sluggish economic growth in South Africa, with the city’s economic growth predicted to be only 3% by 2021. Multiple economic modelling studies have shown that increased electricity prices lead to constricted aggregate output in the economy; a state of affairs that Johannesburg and South Africa plainly cannot afford in its current troublesome economic climate.
“While we are cognisant of the issues and challenges faced by Eskom, we reject outright that customers are responsible for carrying the costs of management failures at Eskom. We strongly believe that there are other mechanisms that Eskom can apply to improve their financial stability,” Mashaba added.
Members of NERSA are required, in terms of section 9(f) of the National Energy Act, 40 of 2004, to act in the public interest in the fulfilment of their duties. The City of Johannesburg is of the opinion that approval of the proposed increase will be a gross dereliction of this legislatively mandated duty to act in the public interest.
Public hearings on the matter came to an end, last week, and Mashaba on Friday led a delegation of City officials to make an oral submission and to elaborate on the City’s objection to the proposed tariff increase.
Mashaba also hosted business leaders and media for a breakfast meeting in Rosebank on Thursday, where he outlined the negative impact to the Joburg economy should the proposed tariff increase get the green light.
