Chamber says Eskom was warned about high prices


By Thandisizwe Mgudlwa

Africa’s oldest business member organisation says Eskom had been warned about high pricing.

“Eskom was warned two years ago that its series of huge price increases would reduce the demand for electricity and that its sales would drop, but it ignored the warning, according to the Cape Chamber of Commerce and Industry.

According to the latest report, Eskom says electricity sales have declined by 2.9 percent in the six months to the end of December.

Now, according to the CEO of Eskom, Brian Dames, they are studying the demand figures to assess whether they were the result of a fundamental change in the way in which electricity is used in South Africa.

Peter Haylett, Chairman of the Chamber’s Industrial Focus Portfolio Committee, said Eskom’s failure to foresee the logical consequences of price increases raised serious doubt about the organisation’s planning ability and its financial projections.

And at the public hearing in Cape Town on the IRP 2010 plan for future energy policy, it was pointed out that Eskom’s own demand forecasts were too high and failed to take into account the effect of the rapidly rising cost of electricity on consumption.

Also revealed is that several speakers pointed out that Eskom had commissioned the Council of Scientific and Industrial Research (CSIR) to do a study on future demand growth but then rejected the CSIR work and used their own predictions which were much higher.

There was expert evidence from the City of Cape Town that the demand curve in the major metropolitan areas was expected to flatten and then decline as electricity tariffs went up.

Haylett said it was obvious that people would find ways to use electricity more efficiently. It was predictable that Companies would commission energy audits and manage down their costs by using gas and more efficient methods and machinery.

“Some industries are even planning to generate much of their own electricity. Everybody can see this except Eskom.”

Meanwhile, in its presentation at the public hearing, the Chamber is reported to have said the IRP 2010 plan failed to provide for an aggressive demand side management programme and that there were huge potential savings from more efficient lighting, the use of heat pumps, solar heating and more efficient appliances.

“The power we save is the cheapest power of all,” the Chamber added.

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