Picture: THINKSTOCK
Picture: THINKSTOCK

BUSINESS Unity South Africa (Busa) estimates households will spend R10bn more on electricity by 2018 if power utility Eskom is allowed to increase its tariffs by 16% a year over the next five years.

On Thursday, at the National Energy Regulator of South Africa’s (Nersa’s) public hearings on Eskom’s price increase application, Busa suggested R150bn in savings Eskom could make in the tariff period up to 2018.

It told the hearing in Midrand that Eskom should ask for an increase of 10.8% a year, which would raise the price of electricity to 102c/kWh from 61c/kWh now, as opposed to the 128c/kWh Eskom’s proposal would deliver.

Busa warned that a number of key sectors in the economy were at a "tipping point" and could ill afford the Eskom increases.

Eskom chief financial officer Paul O’Flaherty stressed that the 16% increases were reflected costs, that would enable the utility to recover the cost of producing electricity and finance new power stations.

"We are here to plead for the right decisions to be made," Busa deputy CEO Raymond Parsons said.

On Wednesday the South African Chamber of Commerce and Industry (Sacci) told the hearings that the proposed increases would devastate the economy and inflate South Africa’s stubbornly high unemployment rate.

Sacci CEO Neren Rau said the increases would lead to a loss of about 2.56% in gross domestic product and a reduction of 4.5% in employment over the five years.

Sacci has about 17,000 member companies.

The 16% increase would force many of the chamber’s medium-sized and small member companies to move operations abroad and shed jobs, Mr Rau said. "More than 50% of our members indicated that operations would have to be scaled down."

Up to 66% of Sacci members surveyed, however, said they could accept an increase of between 5% and 10% over five years. Less than 5% of companies indicated they could handle a 16% increase.