Transcript SAHRC Comments to Nersa on Eskom`s proposed 35% Tariff Increase

Comments to NERSA on Eskom’s
Proposed Tariff Increase
South African Human Rights Commission
JAMES MOTHA & YURI RAMKISSOON
22 JANUARY 2009
Introduction
 The SAHRC recognises that Eskom requires financial support
to enable Eskom to meet South Africa’s future energy
demands.
 The SAHRC is concerned about the impact of the proposed
35% tariff increase on the protection and promotion of human
rights as enshrined in the South African Constitution.
 Many people in South Africa subsist on marginal incomes or
are unemployed.
Continued…
• Recent national economic data shows the following:

Unemployment is increasing;

Companies are closing down because of the recession;

Government revenue is shrinking; and

The government deficit is on the rise.
• If Eskom’s proposed tariff increase is implemented, it will further
impoverish many people and exacerbate existing inequalities in
South Africa
The SAHRC Mandate
 The SAHRC ‘s comments are based on its constitutional
mandate,

Section 184(1) states that the Human Rights Commission
must:
a.
b.
c.
Promote respect for human rights and a culture of human
rights;
Promote the protection, development and attainment of
human rights; and
Monitor and assess the observance of human rights in the
Republic.
Importance of Electricity
 Over 90% of households use electricity as their main source of
lighting.
 Lighting brings benefits such as increased leisure and study time
for school children and greater security.
 Electricity increases access to media, which in turn, increases
awareness of current affairs and the availability of opportunities
such as education.
 63 % of households use electricity as their main source of energy
for cooking and refrigeration.
Continued…
 A number of enterprises in SA were created as a result of
electrification.
 The 2001 census – 70% of all households use electricity for
lighting and 50% for cooking.
 A 2007 survey by Statistics SA show that 80% of households use
it for lighting and 60% for cooking.
 20% of households still had no access to electricity at the time of
the survey.
 These households were almost entirely Black, almost all poor,
and disproportionately but by no means entirely rural.
Continued…
 Since 1994, the number of households has grown far more than
the population
 According to the DME, estimated costs to implement 3.4 million
connections by 2013 was R21 billion in 1994 and a further
R10.8 billion was needed for associated bulk infrastructure.
 This projected target for connections does not allow for the
provision of new households established since 2004.
 The cost of completing electrification programme will therefore
be much higher than anticipated.
A Human Rights Framework
 Binding international human rights law and soft law must be
taken into consideration.
 The framework is as follows:

ICESCR - Article 11(1)- SA is a signatory and legally
compelled not to defeat the object and purpose.

Declaration on the Rights to Development.

Declaration on Social Progress and Development.
The Impact of a Price Increase
 The inclusion of economic and social rights in SA’s constitution
requires government to adopt measures, within its available
resources, which over time will result in an improvement in the
quality of life.
 There is no specific provision in respect of electricity in the
Constitution, however,
 Electricity is an important basic service- local government is
obliged to provide concurrently with other spheres of government.
The Increase in Food Prices
 Upward pressure on food price increases recently came from
electricity.
 Electricity prices have been driving PPI since the upward
adjustment made by Eskom in 2008 and the first two quarters of
2009.
 The 35% proposal or adjustment will have upward inflationary
repercussions on producers as well as on consumer inflation.
Unequal Treatment of the Unequals
 Poor households with access to electricity spend a far higher
share of their income on electricity than those who are financially
better off.
 In 2005/06, the poorest 80% of households , earning less than R2
200 a month, spent 3.3% of their income on electricity;
households in the richest stratum, earning more than R33 000 a
month, spent 1.7% on electricity and used far more electricity per
household.
Municipal Tariff Structure
 The price of electricity between municipalities differs so people who
are in similar economic conditions are subjected to different prices.
 Wealthy households who are residing in municipalities that charge
less have been paying less.
 If the price is increased further without a uniform tariff structure, the
differential treatment of poor people residing in the different
municipalities will be problematic.
 This situation contributes to the existing inequalities and further
entrenches poverty.
 Government cannot allow the price structure to favour the rich and
further disadvantage the poor.
Universal Electrification
 Target of universal access to electricity by all households by 2012/13
now seems unlikely to be met.
 Those without electricity are the poorer households so the lack of
access to electricity will affect quality of life and prevent poorer
households from benefitting from FBE intended for poverty
alleviation.
 Poor households will not be able to afford the proposed 35% price
increase.
 If the 35% is approved, government must develop a clear and
pragmatic plan on how to assist those who are unable to afford the
increase.
Environmental Considerations
 Section 24 of the Constitution of the Republic of South Africa.
 SA is one of the world’s 15 highest CO2 emitters and is therefore
a significant contributor to climate change.
 Climate change leads to an infringement on s24 and other
sections of the Constitution, i.e. the right to life, education, health
etc.
 CC further undermines all poverty alleviation and development
strategies and affects the poorest and most vulnerable in society.
 Impacts will be felt mostly in developing nations, particularly
Africa, which lack skills and resources to deal with the impacts.
Recommendations
 Diversification of energy-generation strategies is needed.
 Nuclear is not the only option and should be implemented with
extreme caution.
 Great research and investment into renewable energy sources is
urgently required.
 Partnerships between Eskom, Government and civil society is
essential in implementing diversified strategies.
 Specific commitments to a climate change strategy should be
made.