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The Democratic Alliance (DA) has persistently called for NERSA to follow an inflation-linked electricity pricing model. In our last meeting with them on 31 January this year, we reiterated these calls.

The National Energy Regulator (NERSA) has revised Eskom’s power tariff increases down to 16% from the previous approval of 25.9%. This translates into an R11.2 billion saving for South African electricity consumers.

Against inflation terms, however, the current price-hike approval is still 10% too high. The DA will therefore continue to fight for electricity price reductions.

The poor spend a large proportion of their income on electricity, food and transport. They will thus suffer disproportionately as a result of the latest price hike approval. A 16% price-hike is unviable, and creates high opportunity costs against competing priorities such as food security. This situation is frankly unjust.

Higher electricity prices also create high barriers to entry for those wanting to exercise entrepreneurial talent and start a small enterprise. Inexpensive electricity is a critical input to any business and the ultimate answer to poverty alleviation lies in the creation of small businesses. Government should therefore do everything in its power to lower the current barriers to entry and encourage entrepreneurial endeavour through lower electricity prices.

Finally, government must come up with a plan to reduce municipalities’ over-reliance on revenue from the sale of electricity. Many municipalities impose an additional hike over and above the NERSA-approved rate. This will only contribute further to non-payment and therefore to additional backlogs in electricity infrastructure maintenance.