ESKOM screws us all

[sterne.law@gmail.com]

So Eskom got their way. Yes we know they asked for 35% but come on, no one starts a negotiation at the level they want to get. They knew that the ridicolous hike would ahve to be reduced to appease the public, so they set it at 35% probably hoping for 25%
The frustration here - is why waste the time and money of evryone with an application taht would be reviewed? I accept that certain laws are passed in our own interest. EG the majority of people will say the alchol content level is too low, but our judgement is clouded ob such an issue. or a 14 year old believing they should be allowed to smoke etc,etc. Certain alws are aimed at protecting the human being. So it is natural that every person and every business will have objected to the hike, becaues we would alll be affected, abusinessman on two levels, company and at home. So we can question objectivity. But if EVERY business body, chamber and organization and every labour movement etc,etc is saying the same thing - we accept an increase is neccessary but the level needs to be reasonable to ensure growth etc their must be a consensus that the facts are talking and not emotions or ignorance. And despite every representation and every protest against the increase level it occurred. Why do we pretend to ahve a democracy/ Why do we say our Constitution allows us to have a say and why waste our money with the farce of pretending we will listen to the people.
Now is teh time for business to make a stand. We know that labour has more power because they use the strike. Business can also strike but are too worried about the loss of money. But ask yourself if you are going to sell 500 cars in a month, will you not sell 500 cars? So if you close for a day or a half day, will your car sales not simply be spread over a different time period. Of course the all for one attitude does help.
The key question is what can the businesses stop or action that has a direct affect on ESKOM and the government. BUT surely somewhere a stand has to be made - Any ideas?

[desA]

What is the current cost of electricity c/kWh, for domestic use?

[AndyD]

There's a high consumption domestic tariff and a low consumption one. The unit price depends which tarrif you're charged at and there's also a daily 'service charge' for high tarrif customers. I think it also varies depending on your location and utility ie Eskom or city council. I'm not sure the exact cent price but I'm paying R600-700 per month in a 3 storey house with borehole irrigation, pool, etc and a family of 4.

[Dave A]

The thing that irks with the Eskom tariff increases is you know a big chunk of it is due to Eskom's own organisational inefficiencies.

The unnecessary road haulage of coal, the purchase of coal at international spot prices. Ultimately we pay for their bad management.

[desA]

What are their main reasons then, for requesting the increased prices?
Will some of this money be locked into power-station upgrades?
What portion will go towards continued inefficient purchase practices?
How can future costs be contained?
What is the effective oversight?

[tec0]

The truth is we need the power stations and coal is not getting cheaper. However if you look at Eskom’s management structure there is more managers then people doing the actual job. Yes there are more managers per PowerStation then “skilled labour” working in the plants. Right now people are allowed to work to age 70 simply because there is no “working training program”.

If I was Eskom I would have a look at who is eating the money and are they worth that much. Cutting down on management and upping skill on the plants will allow for more reliable PowerStation’s and shorter “shut-downs” quality control at the coal supply will allow for better power production and less cost. If bad quality coal is used then it WILL damage the systems and maintenance becomes excessive and expensive.

Then there is the government factor. Noting that government owns both Eskom and the Municipality and is indeed taxing both systems one must ask where priorities lie. Government expects all of us to sacrifice but there are NO sacrifices on their behalf. Then the true question is where is the money going?

Our school systems are dysfunctional, we have no police system and our healthcare system is none existent. So we know that the money is not being used for the country. We have more toll roads than any other country in the world and yet again the money is just disappearing for most of our roads are unusable?

The overall question here is: IS government acting in our best interest? You tell me

[Dave A]

What are their main reasons then, for requesting the increased prices?

Because management (particularly strategic management) cocked it up.

They made the supply chain more expensive.
They failed to secure their coal supply on long term contracts.
They failed to put cost-effective coal delivery systems in place.

And yes, as tec0 points out, they failed to have a quality control system in place for the delivered coal. So they were hurling rock into their furnaces instead (something they called "wet coal" at the time).

They priced their supply to foreign owned aluminium smelters (the ultimate electricity gobbling process) at a massively preferential rate (whether it even covered cost is debatable) and then linked it to the international price of aluminium, so when commodity prices collapsed they lost heaps of money (about as much as their loss in their last financial year).

In the face of such incredible maladministration, savvy financiers who might have loaned the money to finance the now needed capital needs for new plant would far rather have their money placed elsewhere. And Eskom hasn't been salting money away over the years for this plant replacement and expansion either. Nope, it's been "VIVA the party".

So now they need to pay for 20 - 30 year capital investments in cash. Now. From profits they're not making in current operations.

Add it all up and BINGO - runaway price increases for everyone (except those aluminium smelters).

[desA]

Thanks, Dave - excellent review.

I think that the Aluminium Smelter power issue is probably something they may have been locked into by previous administrations. There was a thrust to develop an Aluminium hub in KZN, from Richard's Bay to Pietermaritzburg (names may have changed?).

You cannot throw poor-grade coal into power-station boilers - they are simply not designed for it. The maintenance costs will be enormous.

What happened to Eskom's mini-nuclear plant developments?

[desA]

The modern trend is to establish biomass-fuel boiler systems, or at least co-fired systems, to reduce the coal consumption, & to provide income opportunties for farmers to grow the fuel sources. This is picking up in Sweden, for instance. Coal-firing is so incredibly dirty in the modern age.

How has solar-energy generation side picked up in SA? Seems that folks need to become more self-sufficient & wean themselves off Eskom as much as possible - except for the larger loads.

[tec0]

Nope! Not so fast.

Back in 1997 some mining behemoths wanted to establish a PowerStation. This proposal included that Eskom would be able to buy power from them at peak hours “A rip of some may say I think not” Getting your money’s worth is what it is all about.

Eskom rejected the plan and said they will not allow a privately owned PowerStation to sell power and that The Eskom grid will not allow “transport of this power” to the mining group in question.

The aluminium and steel foundries made similar suggestions knowing that selling power at beak times would make their PowerStation’s a reality but again Eskom showed there greed and said in a letter that the power provided by privately owned PowerStation’s will NOT BE USED and will NOT be carried by Eskom’s infrastructure “Grid”.

Thus making it impossible for privately owned PowerStations. Note that SASOL entered a similar proposal in 2009. Fortunately for SASOL there is no need to use the “National Grid” So watch that space....

The point of this post is to show you that foundries wanted to help out “at a small profit” but who can blame them. The same is true with the mining bodies...

[desA]

Interesting.

I guess that the ultimate power grid will soon be the one from your solar panel to your home.

There would be no logical reason though, for larger cities to not go back to their own power-stations & use only make-up from the national grid. Roll back the clock 100 years.

[tec0]

Right if you live in a “Rent-a-home” because the bank thinks you are to doggy to own your own then solar-power becomes a pipe dream. It is just not feasible to install a R40000 system onto a house that I DO NOT OWN.

So it brings us back to that age old question... what can I do without?

Hot-water, stove, freezer, TV, Internet, Computer, Alarm system, lights, and let us not forget all the other goodies that runs on power. I have to revert back to the stone age. The question is can I cut back on my cut-backs???

In all honesty I am looking into a mobile Solar system will they do exist it! BUT the COST!!! You are talking about a R100000 I will only see a profit after 11 years! And that is excluding maintenance.

Face it “the alternatives” is basically the same as shooting hour self in the foot and then convince yourself that you did it for your own good

[Dave A]

I think that the Aluminium Smelter power issue is probably something they may have been locked into by previous administrations. There was a thrust to develop an Aluminium hub in KZN, from Richard's Bay to Pietermaritzburg (names may have changed?).

There was a smelter at Richards Bay, even when I was with Eskom in 1980/1, but pricing wasn't linked to commodity prices. They got much the same bulk rate as large municipalities. The special treatment they got was a guarantee of continuous power - or more accurately exceptionally limited downtime. Ultimately, if the pots solidified due to a power failure, Eskom was in for replacing them.

Needless to say, there were adequate measures in place to make sure this never happened.

If the price was linked to commodity prices back then, Eskom wouldn't need these rate increases as the smelters would be paying one the most expensive rates in SA by now.

Probably why Eskom took the gamble.

I think the "new deal" arose from negotiations on the proposed Coega smelter (which looks like it's not going to happen).

[Dave A]

There is a serious theft problem when it comes to electrical solar panels

[tec0]

Well I hate to say it but solar power is really useless. The power it produces is too little to keep a normal home going. Yes you can run your microwave and a few lights but anything beneath 40 degrees Celsius and you are in for a shock.

The truth is you need 230v for your stuff not 12v and keeping your stuff running on solar power alone is NOT going to happen.