South African trade union confederation the Congress of South African Trade Unions (Cosatu) has rejected Eskom's 34% interim tariff increase application, calling for the consultation process on the utility's funding model to be fast tracked.

Cosatu industrial policy coordinator Jonas Mosia told the National Energy Regulator of South Africa (Nersa) during a public hearing on Monday that the current economic conditions did not warrant such a "huge" tariff increase.

He said that government information showed that pressure on the electricity grid was easing as a result of the economic crisis, indicating that Eskom might not be experiencing such a "low-reserve margin" and high related costs, as suggested in its application.

Eskom CEO Jacob Maroga said on Monday that South Africa's reserve margin remained well below industry levels, despite a slowdown in demand for power in recent months.

The country's reserve margin was 11,5% in 2008, below the targeted 15%.

Mosia said that the electricity increase would also negatively impact on efforts to revitalise the economy, which slipped into its first recession in 17 years.

Further, the union called for an electricity pricing policy that had to ensure that heavy electricity users pay more and the poor less.

The union believed that poor households carried the burden of high electricity tariffs, while the energy charge for industrial and commercial users was very low.

Mosia noted that Cabinet had adopted the policy, although it was not certain whether this would "cushion" the poor from high electricity tariffs.

In addition, the regulator would also not use this policy when determining the 2009/10 price increases, as it was still in the process of developing regulations for the implementation of the policy, said Mosia.

Cosatu urged Nersa to reject the tariff increase, but Nersa regulator member Ethel Teljeur highlighted that if a tariff was not implemented now, a later tariff might be even higher.