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Article by: Terence Creamer
Published: 05 Jan 2010
|Eskom tariff hearings to kick off in Mpumalanga on Jan 11|
|Public hearings into Eskom's application for a 35% a year hike in its tariffs for the three-year period from April 1, 2010, to March 31, 2013, will kick off in Mpumalanga province on January 11, before moving to all of South Africa's eight other provinces and culminating on January 21 at hearings scheduled for Gauteng province.
The National Energy Regulator of South Africa (Nersa) released details of the hearing schedule on Monday, in which it indicated that all the hearings would begin at 09:00 in the morning and that they should be completed by 15:00.
The Banquet Hall in Nelspruit would host the first of the nine sessions, before moving to venues in: Polokwane, in Limpopo province; Kimberley, in the Northern Cape; Bloemfontein, in Free State province; Rustenburg, in North West; Durban, in KwaZulu-Natal; Port Elizabeth, in Eastern Cape province; Cape Town, in the Western Cape; and Gallagher Estate, in Gauteng province.
Hitherto, Nersa had confined its hearings process to the Gauteng province, South Africa's economic heartland. But the regulator decided to reconfigure its 2010 process into a travelling road show, owing to the level of public interest, and general outcry, shown after Eskom made its initial application on September 30, 2009.
At that point, the power utility submitted an application for increases of 45% a year under the second multiyear price determination period, or MYPD2. However, it subsequently submitted a revised, and lower, application on November 30, 2009, of 35% a year.
Nevertheless, the new application, which still included a revenue requirement to fund those parts of a R400-billion build programme that would require cash flow during the MYPD2 period, was likely to face stiff opposition from civil society groups and political parties.
Business, the labour movement, consumer groups and nongovernmental organisations, and political parties, including the governing African National Congress, have all expressed grave misgivings with the Eskom application.
Some argue that the increases will put strain on an already embattled economy, struggling to emerge from recession, while others have warned that such steep increases could add to the country's unemployment crisis.
Nersa will also have to contend with those arguing that Eskom's calculated rate of return is too high for a State-owned enterprise, which should, these critics will contend, be offering a public good rather than seeking to return a profit.
There is also some concern that independent power producers and renewable energy investors could be crowded out by a tariff solution that effectively supports Eskom's own capital expenditure aspirations.
Some attention may also be given to whether municipalities should be allowed to pass on the full increases granted, particularly given the current disparities in municipal tariffs and the potential economic and social effects of a full pass through.
Nersa will make known its final determination by February 24, 2010, with the approved increases then scheduled to come into force on April 1, 2010, which is the start of Eskom's financial year.