NUMSA REJECTS DECISION BY NERSA TO GRANT ESKOM A TARIFF INCREASE
10 March, 2019
The National Union of Metalworkers of South Africa (NUMSA) has noted the decision by the National Energy Regulator of South Africa (NERSA) to grant Eskom a tariff increase of 9.41%, 8,10% and 5.22% over the next three years. The first increase will be implemented this year on the first of April. As the largest union in South Africa, and a recognized trade union at Eskom, we reject any tariff increase for Eskom.
This is what we submitted to NERSA when we participated in the hearings last month. This was because we knew that any increase, no matter how small, would be disastrous for the working class and the poor who are already unable to afford electricity at its current rate. This will deepen the crisis for industries, particularly small to medium businesses by making electricity costlier, and we are likely to see retrenchments as a result of this decision.
THE IPP’S ARE TO BLAME FOR THE TARIFF INCREASE!
In our application we had also asked NERSA to set aside the Power Purchase Agreements which were signed with the Independent Power Producers. The IPP’s are contributing to the costly tariff which consumers will now be forced to pay. Government went ahead and signed the IPP’s despite the fact that it had enough capacity when the actual demand in the economy was on a decline. They did this without NERSA calling for public hearings. This was the case in 2011, 2012, 2015, 2018 i.e. Bid 1, 2,3 and 4.
NERSA is governed by the National Energy Regulator Act which says that every decision it takes must be consistent with the constitution and be in the public interest. When NERSA allowed Eskom to sign the IPPs without calling public hearings, they acted recklessly and both the Eskom board and Minister of Energy as well as Phakamani Hadebe acted against the Constitution of the country which they swore to uphold.
Eskom confirmed in court last year that it cannot afford IPP’s. Furthermore, in its Integrated Report dated March 2017 it says:
“The dynamics and assumptions underlying the original RE-IPP programme have shifted. Slowing electricity demand, adding new build capacity and a significant improvement in our operational performance have resulted in surplus capacity. Further large scale renewables capacity will add to significant overcapacity on the system, an acceleration of tariff increases for the consumer and stranded assets for Eskom.”
In other words, IPP’s will result in an oversupply of electricity, and because Eskom isn’t making enough from the sale of electricity, it then has to make up for the shortfall through a tariff increase. The report goes on to say: “Current prices for RE-IPP’s range from 77c to R3,80 per kilowatt hour. IPP costs are currently a full pass through to the consumer, negatively impacting electricity and ultimately economic growth.”
The cost of electricity will and has gone up because of IPP’s and those expenses will once again be passed onto the consumer.
This reckless decision is reflected in the fact that in 2015, of the R8.2 billion generated in revenue through NERSA tariff increases, R6.5 billion went to the IPPs. NERSA has ignored the demand we made for the PPA’s to be set aside, and they have gone ahead and granted a tariff increase.
WORKERS AND THEIR FAMALIES WILL PAY FOR IPP’S THROUGH HIGHER TARIFFS AND ALSO JOB LOSSES
The introduction of the costly IPP’s means that several coal fired power stations in Mpumalanga will be shut down, which will result in the loss of 100 thousand coal jobs according to the CSIR. There is no social plan in place for the province of Mpumalanga which will allow workers to be retrained and absorbed in other sectors, in line with the principles of a Just Transition. Both the ANC government and NERSA have chosen to ignore this reality and are proceeding with this reckless decision to pursue and defend IPP’s. Workers and their families will pay for costly IPP’s through higher tariffs, but also, through job losses.
THE ENERGY MINISTER REMAINS CONFLICTED ON THE ISSUE OF THE IPP PROGRAM
This is not surprising given the fact that the minister of Energy has relatives in the IPP sector. This is a blatant conflict of interest. They can deny it, but it remains a fact. IPP’s are costlier than the nuclear program; their existence will lead to hundreds of thousands of jobs being lost, and yet, our government steadfastly proceeds with this project, in spite of the dire implications for the majority of people. Therefore, we can come to no other conclusion, except that this senseless decision has been made for the benefit of family relationships, and to enrich those connected to the governing party at the expense of the working class majority and the poor.
The same ANC government looted and destroyed Eskom through state capture and corruption. They are bleeding the SOE dry by spending millions a day for diesel because of Loadshedding. Now that they have destroyed Eskom, they want to cover up their crime through unbundling and privatization. The majority of South Africans earn less than R4200 per month, and the costly IPP’s are an attack on the working class and the poor who cannot afford electricity due to the high tariffs. The costly IPPs are destroying, the economy, formal and informal jobs because of an unaffordable tariff. We are being forced to subsidize the IPP’s, which are also destroying our wellbeing at the same time.
NUMSA REPEATS THE DEMAND FOR A WORKER CONTROLLED AND OWNED RENEWABLE ENERGY SECTOR
NUMSA is not opposed to Renewable energy. We are a progressive union which supports renewable energy through a Just Transition. Our members and their families are the ones who suffer the harmful effects of climate change. The IPP project is being driven by greedy capitalists who want to get rich quickly. They have no interest in tackling climate change. Only the working class can define a renewable energy program which will genuinely benefit the working class majority and the poor. It must be socially owned, because if it is profit driven, then the excesses which led to the climate change crisis will continue.
The IPP program is nothing more than a get-rich quick scheme for the capitalist elite of South Africa. We reject IPP’s because they violate the principles of a Just Transition in every sense.
WE REJECT THE PROPAGANDA OF MAIN STREAM MEDIA WHICH SEEKS TO DEFEND IPP’S AND PRIVATIZATION
Carol Paton is a senior journalist at Business Day and in her article, “Anti-Ramaphosa crew takes up the battle against Green power” she branded NUMSA as an ‘anti-Ramaphosa’ faction, which is bizarre. We are a Marxist-Leninist inspired trade union. We made a principled decision at our Special National Congress in 2013 to reject the Capitalist ANC and we were kicked out of COSATU for taking this principled and moral stance. We reject IPP’s because they are costly and we reject any plans which will result in job losses.
We reject the unbundling of Eskom because it a gateway to privatization which will lead to higher energy costs and massive retrenchments at Eskom. To reduce us to an anti-Ramaphosa faction just because we reject IPP’s proves what we have always known, which is that publications like Business Day will always be biased in favour of the dominant Capitalist class.
They will defend those interests, even if it means that hundreds of thousands of working class families are left destitute. Business Day is an anti-working class publication and it will defend the interests of greedy capital, regardless of how dire the consequences are for workers and their families. We will not be deterred by propagandists in government and main stream media whose agenda is clearly to promote, and protect IPP business against the broader interests of the working class majority and the poor.
WE WILL INTENSIFY OUR MOBILIZATION OF THE WORKING CLASS TO REJECT IPP’S AND PRIVATIZATION OF ESKOM
We will intensify our mobilization in communities and all members of the working class to reject this tariff increase, the IPP’s and governments plans to privatize Eskom through unbundling. We repeat the call for a total national shutdown in defence of Eskom, and to prevent privatization. The working class must save itself against this vicious onslaught from a greedy capitalist state!
The struggle continues!
Issued by Irvin Jim, NUMSA General Secretary, 10 March 2019