𝗦𝗔𝗙𝗧𝗨 𝗥𝗘𝗝𝗘𝗖𝗧𝗦 𝗧𝗛𝗘 𝗘𝗟𝗘𝗖𝗧𝗥𝗜𝗖𝗜𝗧𝗬 𝗥𝗘𝗚𝗨𝗟𝗔𝗧𝗜𝗢𝗡 𝗔𝗠𝗘𝗡𝗗𝗠𝗘𝗡𝗧 𝗕𝗜𝗟𝗟

BY SAFTU Admin

The South African Federation of Trade Unions (SAFTU) 𝗶𝘀 𝗱𝗶𝘀𝗽𝗹𝗲𝗮𝘀𝗲𝗱 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲 𝗘𝗹𝗲𝗰𝘁𝗿𝗶𝗰𝗶𝘁𝘆 𝗔𝗺𝗲𝗻𝗱𝗺𝗲𝗻𝘁 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻 (𝗘𝗥𝗔) 𝗕𝗶𝗹𝗹 𝘄𝗮𝘀 𝗽𝗮𝘀𝘀𝗲𝗱 𝗶𝗻 𝗽𝗮𝗿𝗹𝗶𝗮𝗺𝗲𝗻𝘁. 𝗧𝗵𝗶𝘀 𝗕𝗶𝗹𝗹 𝘄𝗶𝗹𝗹 𝗿𝗮𝗱𝗶𝗰𝗮𝗹𝗹𝘆 𝗹𝗶𝗯𝗲𝗿𝗮𝗹𝗶𝘀𝗲 𝘁𝗵𝗲 𝗲𝗹𝗲𝗰𝘁𝗿𝗶𝗰𝗶𝘁𝘆 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗻𝗱 𝗵𝗮𝘀𝘁𝗲𝗻 𝘁𝗵𝗲 𝗽𝗿𝗶𝘃𝗮𝘁𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗲𝗹𝗲𝗰𝘁𝗿𝗶𝗰𝗶𝘁𝘆 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻.

In our submission to parliament opposing the Bill, we noted that the Bill establishes a framework for the creation of the transmission company and the market for energy generators. The creation of the market for electricity generators through the establishment of the Transmission System Market Operator, and a Central Purchasing Agency, are aimed at furthering the objectives of privatising energy provision in this country.

The Bill provides a legal framework for the proliferation of Independent Power Producers (IPPs), which will, in line with the plans to unbundle and dismantle Eskom, produce 66% of South Africa’s electricity by 2035 (according to Eskom’s projection presented to the Presidential Climate Commission). They have planned to decommission Eskom’s coal fleet without investing heavily in its renewable capacity. The idea is to replace Eskom’s dominance by having IPPs dominate the production of electricity through renewables.

Furthermore, the Bill seeks to “allow for a reasonable return commensurate with the risk…” This means the tariff structure that will be adopted must guarantee the generators of electricity, many of whom will be IPPs at the end of the unbundling of Eskom, profit.

If the risk is higher, then the profit should be higher, and if the risk is lower, the return should be lower. To make higher profits in the context of a higher risk, electricity will have to be sold at higher tariffs to the consumers. Higher tariffs increases energy poverty, as the increase in electricity prices since 2007 has shown.

𝗦𝗔𝗙𝗧𝗨 𝗿𝗲𝗷𝗲𝗰𝘁𝘀 𝘁𝗵𝗲 𝗿𝗶𝘀𝗸-𝗿𝗲𝘁𝘂𝗿𝗻-𝗼𝗿𝗶𝗲𝗻𝘁𝗲𝗱 𝘁𝗮𝗿𝗶𝗳𝗳. The downward pressure on electricity prices that is presumably going to be dawned by the liberalisation of the energy markets will crumble, primarily because of profit-guarantees encapsulated in the “reasonable return commensurate with the risk”. Secondarily, the energy market will inevitably concentrate and centralise, leading to the creation of oligopolies and monopolies that will mark prices up.

𝗦𝗔𝗙𝗧𝗨 𝗿𝗲𝗮𝗳𝗳𝗶𝗿𝗺𝘀 𝘁𝗵𝗮𝘁 𝗼𝘂𝗿 𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝘁𝗼 𝘁𝗵𝗲 𝗲𝗻𝗲𝗿𝗴𝘆 𝗰𝗿𝗶𝘀𝗶𝘀 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗳𝘂𝘁𝘂𝗿𝗲 𝗼𝗳 𝗲𝗻𝗲𝗿𝗴𝘆 𝗵𝗮𝘀 𝘁𝗼 𝗯𝗲 𝗮 𝗽𝘂𝗯𝗹𝗶𝗰 𝗽𝗮𝘁𝗵𝘄𝗮𝘆 𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻, 𝗼𝗽𝗽𝗼𝘀𝗶𝗻𝗴 𝘁𝗵𝗲 𝗹𝗶𝗯𝗲𝗿𝗮𝗹𝗶𝘀𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝘁𝗵𝗲 𝗲𝗻𝗲𝗿𝗴𝘆 𝗴𝗲𝗻𝗲𝗿𝗮𝘁𝗶𝗼𝗻 𝗺𝗮𝗿𝗸𝗲𝘁, 𝘁𝗵𝗲 𝘂𝗻𝗯𝘂𝗻𝗱𝗹𝗶𝗻𝗴 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗱𝗶𝘀𝗺𝗮𝗻𝘁𝗹𝗶𝗻𝗴 𝗼𝗳 𝗘𝘀𝗸𝗼𝗺. Together with the public provision of energy, Eskom as a vertically integrated public electricity-producing company must be protected from the private sector.