Doubling Electricity Costs over 5 years

Escom’s proposed 16% per annum price hike for the next 5 years will have the effect of at least doubling your electricity costs over those 5 years.

Here  the M & G article “Eskom price hike: ‘Daylight robbery’ will unite us” makes the point that we should be attacking the down-stream suppliers (municipalities) for their wasteful habits so as to control costs, and while this is perfectly legitimate, we also need to examine Eskom’s  role as one of the largest producers of electricity in the world.  

  • It operates as a monopoly, so there are no free market pressures to modify it’s market behaviour, 
  • it has a captive market (to date I think it is still the only legal trader in electricity), while others can supply the grid they must do so through Escom.
  • It can charge whatever it likes, effectively, through use of threats of power interruptions if it doesn’t get its way.
  • It is trying to fund capital expenditure out of current income.
  • Whatever economies of scale might arise through these practices are dissipated through inefficiencies and bad management. 

This permits the very worst business and administrative practices to exist in the guise of having a power supplier that is supposed to pay its own way but is never held accountable by the politicians or the market place.  Opening the energy market to bone fide free market competition will go a long way to introducing some reality into South Africa’s energy sector and energy costs. 

The Direct Democracy Forum will end Escom’s monopoly over power production and supply and change its role to one of grid management and coordinator rather than power producer.  Expansion of the nation’s energy capacity will have to come from capital investment raised on the capital market and through government bonds rather than from exploitation of existing consumers for the benefit of future consumers.

See DDF energy policies and DDF financial policies for a more detailed picture of how this will be managed under a DDF administration.

As to controlling the excesses of municipalities, who also are effective monopolies, see DDF local government and service delivery policies for a dose of reality.

The buck stops at the ballot box

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