The World Wide Fund for Nature (WWF South Africa) made its input on
Friday to the hearings by the National Energy Regulator (NERSA) on
Eskom’s multi-year electricity tariff increases.Eskom is proposing a price increase of 49c/kWh to 82c/kWh by 2012, in order to finance the building of two planned coal-fired power stations, Medupi and Kusile. The parastatal lacks the necessary finance to fund the building these stations owing to decades of suppressing energy prices.
WWF states, however, that if Independent Power Producers (IPPs) were to contribute the same 20% of total electricity that Medupi and Kusile would supply, even at R1.50/kWh, then this cost would be significantly diluted by the 80% derived from Eskom’s existing fleet continuing to supply at 33c/kWh. The price for the system as a whole would rise to 58.6c/kWh – an increase of 25.6c/kWh compared to Eskom’s request for a 49c/kWh increase.
Furthermore, R1.50/kWh would be sufficient to fund a mix of clean energy including industrial co-generation, wind and solar power, and would be fixed for 20 years, with only inflation-linked escalation, through the Power Purchase Agreement.
“World-wide - from Beijing to Boston, from Bonn to Bangalore - investors are shifting from dirty, coal-based energy, into fast-growing renewable energy. It makes no sense to be paying more for the slow horse, coal, than for the fast horse, renewable energy,” said WWF Trade and Investment Advisor Peet du Plooy.
WWF also challenged the lawfulness of the Integrated Resource Plan (IRP) on which Eskom’s build programme is based and questioned the efficiency of Eskom as a power supplier given that it will have to improve its revenue through the tariff to fund the two giant stations. The organisation warned NERSA that investing in coal-based power at this scale will lead to locking-in the ever-increasing costs of coal and carbon emissions for decades to come.
WWF recommended that NERSA approves only the tariff increase required to fund the first station, Medupi. Eskom has already started building Medupi and unless this is paid for by Eskom’s customers, the tax payer will have to pick up the bill for the utility’s cash shortfalls, as has recently been the case with other parastatals like SAA and the SABC.
Further, it recommended that NERSA should not approve a tariff increase for building Kusile, unless and until it is clearly shown to be the cheapest option for the country over the long-term. This must be done through an Integrated Resource Plan, developed according to the provisions of the National Energy Act, that meets the national targets for universal access to electricity, an increased share of renewable energy and private sector participation, as well as the reduction of greenhouse gas emissions.
“Approving a radical tariff increase in support of an investment worth R142 billion before the best energy option for the country has been considered in a proper and lawful plan, is tantamount to putting the cart before the horse,” concludes du Plooy.
Share it!
