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Eskom may recover years of tariff losses from homeowners

squeezing dryHomeowners must brace themselves for an up to 53% increase in electricity costs as Eskom begins to claw back three-year increases that have been put on hold due to a protracted legal process.

Last week Tuesday (23 August 2017), the Constitutional Court upheld an earlier Supreme Court of Appeal decision and ruled in favour of Eskom to recover up to R60bn in tariff increases that have been put on ice for the period 2014 to 2017.

Beleaguered homeowners and tenants struggling in a no-growth economy, with an average monthly electricity bill of R1,000 are now faced with finding an extra R530 a month for electricity.

“In today’s economy, every cent counts as retrenchments rise and businesses struggle to keep going,” said Neville Berkowitz, property economist and founder of low-commission estate agency, HomeBid. “Wherever homeowners can save money they must. Unless the political landscape changes meaningfully and confidence returns to the economy, this current no-economic-growth phase will remain for the foreseeable future.”

This view was shared by economist Mike Schüssler who said in a Citizen article in June that despite consumers and business cutting back on electricity consumption, the portion of GDP spent on electricity costs has doubled from about 2% in 1996 to almost 4% in 2015.

“This has cost the economy jobs and of course growth,” he was quoted as saying. “It has also cost Eskom, which then comes back to ask the economy for more money – and people must cut back on electricity consumption even more.”

The Nelson Mandela Bay Business Chamber, which first lodged the application against the way in which Eskom calculated its tariff increases for multi-year increases, said the country’s electricity tariffs had “almost quadrupled” in the past 10 years and that they were “among the highest in the world”.

“This is unsustainable and will create even more hardship for hard-pressed consumers and the business sector struggling to survive in the recessionary environment created in part by irresponsible decisions by government which, among other consequences, has led to South Africa being downgraded to junk status,” chamber president, Thomas Schaefer, was quoted as saying.

Homeowners, however, have viable alternatives such as solar and gas, as well as battery power systems, which every year get cheaper to purchase and to maintain.

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david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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