Eskom wants to increase the basic free electricity allocation to poor households from 50 kilowatts to between 70 and 100 kilowatts next year, CEO Jacob Maroga said on Tuesday.

"The current discussion is increasing it to 70 or 100 kilowatt," Maroga said.

He told reporters in Cape Town the struggling electricity supplier had included this proposal in its tariff increase application for next year, which was submitted to the National Electricity Regulator of SA (Nersa) at the end of September.

Maroga declined to divulge the price increase Eskom had asked Nersa to approve for next year, saying this would only become public once the country's 283 municipalities had commented on the application.

Media reports have said Eskom applied for a 40 percent increase, after putting up the power price by 31.7 percent this year. The company submitted an increase application for the next three years, of which the first hike would come into force in April next year.

Aluminium prices plunged

The chairperson of Parliament's portfolio committee on public enterprises, Vytjie Mentor, told Maroga on Tuesday she would not allow him to put a precise figure to MPs as it "can create consternation or whatever in the public".

Maroga told the committee that Eskom had begun the process of renegotiating long-term derivative-based contracts with clients with aluminium smelters to untie its supply price from commodity prices.

So-called embedded derivatives accounted for most of Eskom's R9.7-billion operating loss last year as aluminium prices plunged during the global economic crisis.

Maroga would not comment on how these clients, notably mining company BHP Billiton, had reacted to its plans to rewrite long-standing deals.

"We stated our intention — we want to relook at the contract. It is still too early to make any comment," he said.

Eskom does not want to lose credibility

Public Enterprises Minister Barbara Hogan said last month she believed the contracts could be restructured, telling reporters: "You can always negotiate again."

Maroga added, however, that the process was a delicate one as the company did not want to lose credibility with clients.

He said Eskom currently had spare capacity of an average 10 percent and coal stockpiles for about 42 days.

Ideally, the company needed spare capacity of at least 15 percent but could only hope to achieve this in five years' time, he said.

Whether this would be the case was a balancing act between demand and capacity, which meant that consumers had to remain aware of the need to use electricity judiciously.

Spared of blackouts

Deputy Minister of Public Enterprises Enoch Godongwana challenged Maroga's assurances to the committee that energy supply had been secured and that the country would be spared another bout of blackouts as seen in early 2008.

He said coal supply and quality remained real concerns.

"I would not be as enthusiastic as Mr Maroga is about security of supply," he warned, adding that he wanted to remind the Eskom chief that he had a duty to run the company in a "sustainable way".

Internal Eskom communications leaked by the opposition last month exposed grave concerns about the way in which the company managed its coal stocks and supply contracts.

Sapa

RSS
Digg
de.li.cious
facebook
SA's top 5 fraud cases Meriza La Key counts down South Africa's biggest Ponzi schemes.
The Malema factor Julius Malema ANCYL leader Julius Malema has become one of the most feared and most powerful figures in the ANC.
The people vs Eskom 2 Former Eskom employee 'Ike' writes from Canada to give his views on Eskom's proposed tariff hike.