Comment on Eskom’s Proposal for Price Increase in 2008/9

by ALTMAN, M, 2008
Centre for Poverty Employment and Growth, Human Sciences Research Council

This is a submission made to NERSA in respect of its MYPD review. Eskom is seeking additional price increases above the 14.2% already approved, that is, a 100% real increase over two years. Altman investigates the potential economic impact of differently distributed pricing or rationing options to reduce peak electricity usage and electricity consumption. She also considers the potential impact of different pricing proposals on Eskom itself. This submission to NERSA reflects on:· The financial implications of alternative pricing scenarios ·The implications of Eskom’s proposals for the economy – for firms and for growth, inflation and employment more generally. ·  Comments on the approach to a price increase, given multiple objectives. This document is a revised version of one submitted in April 2008, and incorporates feedback from Eskom, NERSA, the Presidency and the Treasury, as well as various experts and stakeholders. Feedback received and revisions are summarised in the appendix.