Last Year’s Error Will Cost 41,000 Jobs Minimum

Statement by Kevin Mileham MP – DA Spokesperson on Electricity and Energy:

The devastating error made by NERSA last year, leaving a R54-million shortfall in Eskom’s revenue, is likely to kill over 41,000 jobs as higher electricity charges come into effect. This is a crisis, as more people face losing their jobs because of exorbitant electricity prices.

The problem is not a once-off tariff mistake, but a fundamental failure of the laws that govern NERSA. The DA is going to fight to change these laws, so that errors like this can never happen again.

NERSA’s own economic impact assessment shows that correcting the R54-billion mistake is going to reduce household income by R10 billion and it has modelled that around 41,000 jobs may be terminated.

The root cause of this issue needs to be addressed making the necessary changes to the law.

That is exactly why the DA will put before Parliament our own Electricity Regulation Amendment Bill – which is the DA’s solution to ensure electricity tariffs are determined through a process that is transparent, accountable and lawful. This will stop NERSA setting the price of our electricity behind closed doors, without any of us being able to oversee or intervene.

The DA’s Bill represents our belief that electricity tariffs should only be raised to recover the legitimate cost of supplying electricity – not the cost of regulatory uncertainty, administrative error or opaque decision-making. South Africans who pay their electricity bills should never become the insurer of last resort for failures in the regulatory process.

Among other reforms, the DA’s Bill will:

• prohibit retrospective tariff determinations that undermine price certainty;
• ensure that significant tariff adjustments cannot be disguised as minor administrative corrections;
• require full public participation before material tariff adjustments are approved;
• require independent, audited cost-of-supply studies before municipal electricity tariffs can be approved; and
• strengthen legal certainty for consumers, municipalities, investors and electricity suppliers alike.

The solution is not for an endless cycle of turning to the courts year after year to overturn tariff decisions made in secret. Regulatory decisions affecting millions of citizens should be transparent from the outset—not only after expensive litigation has commenced.

The DA will continue to support a financially sustainable electricity sector. But sustainability cannot come at the expense of transparency, accountability and the rule of law.

Therefore, I call on the Portfolio Committee on Electricity and Energy to give urgent consideration to the Electricity Regulation Amendment Bill when introduced.