Exploring the Latest Eskom Tariff Increase
South African energy provider Eskom recently announced a further significant increase to its electricity tariffs. The 11.9% projected increase would leave the company’s prices at the highest level ever recorded in the country, much to the outrage and concern of consumers across South Africa. This latest tariff hike from Eskom comes in addition to previous increases of 8.1% implemented through mid-2020 and following several years of consecutive hikes since 2013 – bringing about an overall 134% cost escalation for users compared to pre-2013 tariffs.
Given the continued financial squeeze on citizens amid the ongoing COVID19 crisis, this announcement has raised serious questions over the steady rise in electricity costs and its potential effects on households, businesses and industry alike.
At this moment in time, it appears that many South African consumers need to face up to a grim reality: electricity is set to become increasingly more expensive with every passing year unless meaningful intervention can be achieved. But what exactly lies behind this mounting cost-pressure?
There are numerous reasons why Eskom’s internal costs have been rising so sharply over recent years – factors such as increased fuel costs, rising labor expenses and a heightened capital expenditure program based around modernizing infrastructure all contribute significantly. In addition, the general economic malaise has caused Eskom’s sales revenues to be lower than anticipated – increasing pressure on them to raise fees from their customer base; something which disproportionately affects poorer households due to their inadequate access to alternative sources of power or renewable energy technology advances.
On top of these drivers, corruption is also believed to be playing an important role in inflating both capital investments and operational costs through suspicious supplier contracts and substandard construction efforts at various major power stations being built by state-run enterprises such as Eskom Holdings SOC Limited (ESKOM). Without essential statutory reforms that punish bad behaviour while rewarding excellent performance (in terms of efficiency and waste reduction), it is likely that electricity prices will continue on an upward trajectory with no end in sight for already cash-strapped customers throughout SA’s provinces.
It is vital that decisive action is taken now if South Africans are going avoid further hardship being placed upon them by out-of-control pricing corporates like ESKOM amid trying times. To ensure fairness between all stakeholders involved, decisive actions must be taken by policy makers as well as individuals if any degree of cost stability or downward pressure is to be realized in regards to electricity pricing over the coming months or years
Analyzing the Affect of the New Tariffs on the South African Consumer
South Africa’s main electricity provider, Eskom, has recently announced a tariff increase of 9.41 percent in 2021. This is making many South Africans uneasy, as an already difficult economic situation continues to get worse. To understand the impact of this tariff increase on the population as a whole, let’s take a closer look at what it means for consumers and businesses.
The increased electricity costs have caused anger amongst South African citizens. Many are concerned that their disposable income will be affected further by the added expense of utilities due to the increase in tariffs. Small businesses too will incur higher costs to cover their power use, cutting into their profits. This could potentially lead to job losses if companies cannot afford to keep employees on or raise prices for goods and services which would result in further strain on consumers who are already struggling with prices of basic goods amid high inflation rates.
To offset some of these impacts, certain steps are being taken by the government such as increasing minimum wages and providing relief payments for those affected by the pandemic such as those receiving grants and pensions. These measures will undoubtedly provide some form of assistance but won’t necessarily make up for increased utility costs due to the tariff hike particularly given other economic restrictions like higher taxes and limited job market opportunities created by Covid-19.
As expected, these new tariffs have also had considerable effects on Eskom’s bottom line; during 2020 they reported profits exceeding more than R15 billion thanks largely in part to this increased tariff income. It is unlikely that government intervention in 2022 – when the current period comes under review – will affect future Eskom pricing substantially unless changes are made through expert consensus or policy reviews currently being pursued by civic groups.
For now, however, South African consumers remain feeling anxious over their financial prospects with no immediate reprieve from these new higher electricity bills coming their way soon enough. Businesses may be forced to look for alternative ways save money so as not to pass additional burdens onto customers who can least afford it; although that does not negate the fact that everyone is affected financially one way or another by these latest tarrif increases put forward by Eskom. Despite appeal procedures available via legal action being pursued against the huge utility network, most of us normal folk cannot do much else but manage our resources more efficiently while hopefully looking forward with optimism towards better economic times down the road in years ahead!
Considering Alternatives to Combat the Effects of the Tariff Increase
With energy costs at the forefront of many South African’s minds, Eskom’s recent tariff increase has come as a shock for many. Although electricity prices have risen as expected throughout 2019 and into 2020, the most recent 8% hike has raised eyebrows amongst consumers and business owners alike.
The cost of electricity is becoming increasingly prohibitive for both individuals and commercial entities to operate cost-effectively within South Africa. As such, there is an urgent need to explore viable alternative solutions that will help cushion against the negative impacts of these rising electricity costs.
Exploring Energy-Efficient Solutions
A number of technological advances in energy-saving initiatives are offering new ways in which we can offset these higher electricity costs. Examples include solar panel installations, smart thermostats, LED lighting on premises and more efficient use of air conditioning units during peak periods. The goal behind this approach is twofold – customers should be able to reduce their reliance on traditional sources of power while providing them with crucial savings over time.
In addition, municipalities across the country are running awareness campaigns in residential and commercial areas targeted at driving efficiency through behavioural changes in energy consumption. Many organisations have even gone one step further by running subsidised ‘efficiency packages’ which includes a whole suite of awareness initiatives and often complementary products or services that aim to substantially reduce energy consumption overall.
Investing in Smart Solutions
Businesses, large and small, should consider exploring these sustainable alternatives while taking a holistic approach to their operations by investing in smart solutions such as automated software systems that can analyse historical energy data to build insights which lead to operational efficiencies within their facilities. Investing in sustainability also increases customer loyalty making it easier for companies to gain market traction with green practices forming part of their marketing strategy resulting in wider consumer appeal alongside cost savings built from improved resource management.
For those businesses within the industrial sector who rely heavily upon electricity powered equipment like boilers or machinery should look towards alternative methods such as renewable gas or biofuel sources where possible as operating costs become more manageable than expensive diesel derivatives. Furthermore, onsite renewable options such as wind turbines could go a long way towards alleviating dependence on Central Grid sources and further drive down long term expenditure relating to energy usage for large corporations operating plants or warehouses across vast regions within a country or continent even – thus achieving substantial savings along the way.
As electricity prices continue heading upwards it becomes ever more challenging for customers to contain growing overheads necessary for daily operations be it personal budgets or department spend tracking tools employed by larger enterprises however with rational changes in the utilisation of technology today there are now real avenues available through which key stakeholders can begin building strategies designed around mitigating runaway expenses caused by sharp rises in tariffs moving forward allowing them access back into a regular budget cycle previously experienced prior to Eskom’s latest increase earlier this year.