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Home of the South African farmer | Ikhaya lomlimi waseNingizimu Africa | Tuiste van die Suid-Afrikaanse boer | Lehae la balimi ba Africa Borwa
Agri SA’s comments on Eskom’s Regulatory
Clearing Account (RCA) Application
MYPD3 Year 1 (2013/14)
4 February 2016
Thabi Nkosi: Senior Economist- Agri SA
Agri SA is a federation of agricultural organisations comprising of nine provincial
agricultural unions and 24 commodity organisations.
We promote, on behalf of our members:
• development
• profitability
• stability
• sustainability
of agriculture in South Africa by means of our involvement and input on national
and international policy level. Through our affiliations, we represent a diverse group
of farmers irrespective of gender, colour or creed.
Agri SA is also a member of Business Unity South Africa (BUSA) and thus also
engages with other sectors of the economy on matters of transversal importance
We acknowledge need for Eskom to maintain a healthy financial position and to advocate for full cost recovery BUT the downstream effects of substantial tariff hikes on sectors cannot be
ignored
We have supported the adoption of the MYPD methodology as a mechanism of bringing certainty and ensuring Eskom’s financial
viability
However, given the fragile state of the country’s key sectors and the economy at large a blind application of the methodology at this stage would be inappropriate and would
exacerbate economic difficulties
We urge NERSA to give greater consideration to the ability of customers to absorb cost increases and to the likely impact that further tariff increases will have on future demand and further revenue
variances which will give rise to further hefty RCA applications
(Vicious cycle)
We agree with Eskom that high electricity prices have unfavourably affected the demand for electricity, contributing to the unfavourable
revenue variance
Further price increases will almost certainly lead to reduced electricity consumption, continuing an unsustainable cycle of under-recovery and
unfavourable revenue variances
NOTE: Unlike the economy at large, the demand for electricity in the agricultural sector is relatively inelastic in the short term despite current efforts