Energy intensive users still to profit despite Eskom's tariff hikes - groundWork, Friends of the Earth, South Africa

Pietermaritzburg, 17 January 2013 – Large energy intensive users such as smelters are still making profits through Eskom's energy buy-back schemes, despite them resisting energy price increases that will impact on the poor.  Using the public's money to prop up the profits of large energy users is an injustice that must be stopped.

Eskom admits that: "As long as tariffs are below cost-reflective levels, consumers of electricity are, in effect, being subsidised by the government – and, ultimately the taxpayer. It also means that the major beneficiaries of that subsidy are those who use the most electricity. The implicit subsidy provided by electricity that is not cost reflective therefore not only distorts the efficiency of the market but also means that wealth is effectively being transferred to large consumers of electricity, which is neither equitable nor desirable" [1].

groundWork, Friends of the Earth South Africa [2] has called upon the National Energy Regulator of South Africa (Nersa) to investigate these buy-back schemes and to ensure that the public have access to all the documents that have been signed between business and Eskom to allow for this 'fraudulent' practice of using tax payers money to ensure profitability of energy intensive corporates.

ArcelorMittal, is one of these smelters that have made huge profits from decades of cheap electricity and which has made their principle owner, Lakshmi Mittal, one of the richest men in the world. They are now balking at spending capital in energy efficiency as their preferred business-as-usual approach towards energy would maintain the era of cheap electricity to allow them to continue creating profits for themselves.

groundWork's oral submission made today at the Nersa public hearing is based upon the "Comments on Eskom's Revenue Application for MYPD 3. Submitted to Nersa by groundWork, Friends of the Earth, South Africa" [3] on 20 November 2012 which was supported by South Africa's leading social and environmental justice organisations. 

Siziwe Khanyile, groundWork's Climate and Energy Justice Campaigner, made the submission and called on Nersa to consider the externalised costs of construction and operation to the environment and to people's health and well-being – which makes the price hikes even more burdensome. "People in places such as the Highveld, the Vaal and Lephalale are dealt a double blow from the current Eskom energy model; firstly, they suffer from the air pollution caused by burning coal in the Eskom power stations that operate without scrubbers, and secondly, because they cannot afford Eskom's electricity they have to burn coal, paraffin and burnable waste indoors, generating toxic air pollution".

Providing cheap and abundant energy to the big players in South Africa's industrial sector is at a cost to the country's people, both in terms of their right live in healthy environments as well as their ability to meet their energy costs and a basic, dignified standard of living. This requires the South African government to turn away from fossil and nuclear technologies and focus national capacity on building a sustainable energy system under people's control and based on energy conservation and efficiency and renewable generation technologies.

FOOTNOTES

[1] Part 1 Revenue Application: Multi-Year Price Determination 2013/14 to 2017/18 (MYPD 3) 17 October 2012, Pg. 16

[2] groundWork is an environmental justice organisation working with community people from around South Africa, and increasingly Southern Africa, on environmental justice and human rights issues focusing on Air Quality, Climate and Energy Justice, Waste and Environmental Health. groundWork is the South African member of Friends of the Earth International.

[3] Comments on Eskom's Revenue Application for MYPD3. Submitted to Nersa by groundWork, Friends of the Earth, South Africa - download here.

CONTACTS

Siziwe Khanyile, Climate and Energy Justice Campaigner at groundWork at (033) 342 5662 or siziwe@groundwork.org.za

Bobby Peek, Director at groundWork at (033) 342 5662 / 082 464 1383 or bobby@groundwork.org.za

Megan Lewis, Media and Information Campaigner at groundWork at (033) 342 5662 / 083 450 5541 or, megan@groundwork.org.za