For some time now, the Democratic Alliance (DA) has been concerned about the supply of power to large industrial electricity consumers in our economy. It is well known that aluminium smelters consume huge amounts of electricity, and as such, add significantly to our consumption burden. At the same time, these smelters obviously also produce hugely valuable goods that generate significant revenues for companies and government through the taxation of these activities, not to mention that many people are employed in that industry. The continuing pressure on our country’s power supplies therefore places Eskom in a difficult position. On the one hand, large industrial consumers need to be able to operate at maximum efficiency all the time, and on the other hand, their consumption needs to be reigned in when our electricity grid is under severe pressure.
During June this year, I wrote to the Minister of Public Enterprises in an attempt to find out more about what agreements had been reached between Eskom and its largest industrial electricity consumers. The DA believes that some form of “shut-down” agreement exists between Eskom and these consumers. These agreements would stipulate that Eskom has the right to cut off electricity supply to industrial consumers when necessary, but would then reimburse the industrial users for wasted capacity and lost profits. These agreements could potentially be incredibly expense for Eskom and therefore the state, depending on how often they are and invoked and what the terms of the agreements are.
The Minister replied to my letter indicating that no shut down agreements existed, but that it had signed demand market participation agreements with 21 large industrial consumers. The Minister also included that these agreements had interruptability clauses with aluminium smelters, which would suggest that agreements similar to “shut down agreements” had been reached. I have not been able to gain access to more information regarding the agreements since then.
The demand market participation agreements need to be transparent. In this light, the DA notes the judgement handed down on Friday by the South African High Court in the matter between Media 24 and Eskom. The court’s decision to compel Eskom to make a range of documents available to Media 24 regarding secret pricing deals is significant, as it could be applied to the demand market participation agreements as well. The DA will therefore be resubmitting Parliamentary questions with regards to these agreements, particularly in connection to the details contained in the “interruptability clauses” and the extent to which Eskom has had to compensate industrial users for electricity interruptions.
Eskom’s transparency in this regard is vital, as it potentially involves large volumes of state resources. State institutions, such as Eskom, need to be transparent and accountable to the South African public, and last Friday’s ruling obliges the Minister to make information, previously concealed due to verbal confidentiality agreements, available for public scrutiny.