Hill-Lewis slams Eskom and Nersa over proposed electricity tariff hikes

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JEREMY MAGGS: Cape Town’s Mayor, Geordin Hill-Lewis, is pushing back and pushing back hard against Eskom and the electricity regulator Nersa (National Energy Regulator of South Africa), accusing them of trying to push through what he calls an unjustified double tariff hike that could see power prices rise by more than 10% a year over the next two years.

The city he leads says that the increase is based on flawed calculations, outdated Eskom data and also ignores the utility’s improved financial position.

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Mayor Hill-Lewis, welcome to you and let’s start bluntly, Nersa says this is a technical correction to an earlier error. You’re calling it fundamentally unfair. Why should the public trust your numbers over the regulator’s?

GEORDIN HILL-LEWIS: No, I don’t think it’s a dispute over the numbers. The dispute is over whether it’s justifiable to do this. Eskom and Nersa went to court and basically a reached a deal that they would allow R54 billion in additional revenue for Eskom from the tariff.

That was then challenged in court and thrown out, and they were told to do a new public participation process to correct the tariff if they wanted to.

Now they’ve come with a tariff proposal, which is now out for public comment. That’s why I’m commenting on it, which gives them even more than R54 billion in new revenue.

Now they call that, we just missed a comma or some technical correction, but the impact is massive on the country. This is, by the way, after – we must never forget – more than a 500% increase in electricity prices over the last decade or so.

We just think that these kinds of year-on-year increases are totally unsustainable.

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We all feel the pinch about how expensive electricity is becoming in South Africa and of course, this is the base price on which all other electricity in South Africa is priced. So it has to be opposed.

JEREMY MAGGS: Let’s talk about impact, businesses, not only in Cape Town but around the country, already face above inflation increases year after year. Have you worked out at what point then tariffs start actively destroying jobs and investment rather than protecting the grid?

GEORDIN HILL-LEWIS: Look, I think that might be already happening. It’s incredibly difficult for a manufacturing business, for example, manufacturing is very power intensive, very difficult to make a go of it in South Africa with the price of power at what it currently is. Now, you add continuous year-on-year above inflation increases and that just compounds worse.

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So what you get is those larger manufacturers that have the pockets, they check out of the grid, they make their own power arrangements, like you see in the mining industry and many other large manufacturers.

What that means is that you just get more and more pressure on smaller consumers, small businesses, households and medium-sized businesses to carry the whole system. That is not healthy or sustainable.

JEREMY MAGGS: So let me ask you this question. If Nersa pushes ahead, regardless, what real leverage does Cape Town have beyond, say, a court challenge? Or do you think this is just another case of a metro being overruled by national regulators?

GEORDIN HILL-LEWIS: It might be the case, but look, we will certainly consider what we can do. I can’t commit to legal action. We’ll have to see the prospects of is there anything that that could give us the prospect of victory?

But I suspect that this is a decision by Nersa that will be challenged, if not by us, then by maybe some of the industry bodies, civil society bodies and so on.

There’s a broader point to be made about just the conduct and competence at Nersa. There are a number of bungles that we’ve seen from them in recent times.

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We won a case against them late last year in the Gauteng High Court on the timetable that they take to issue municipal tariff decisions, sometimes many months, sometimes three, four, or five months after the end of our budget process they bother to issue their tariff decision.

So we’ve won on that one.

I think there are probably four or five or even six major cases around the country where they’ve been shown up to be very bungle prone.

I think we have to have a discussion about whether that regulator is helping or harming the South African economy.

JEREMY MAGGS: Let me ask you, though, if Nersa were to restart the process properly, what would a fair increase look like in your view?

GEORDIN HILL-LEWIS: Well, this was the point that I made about Eskom’s financial position. If you just consider what’s happened at Eskom, we have had no load shedding. Now, that means that they sell more power because obviously the grid is on for more of the day and therefore, they sell more units of electricity.

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That means revenue is better and profits are better. It also means that they have spent tens of billions of rands less on diesel than they would ordinarily have done during load shedding.

So it stands to reason, and we can see that by the fact that Eskom has returned to profit for the first time in many years, that Eskom’s finances are in a much, much better position.

It begs the question, why do they need continuous above inflation increases even though they have seemingly right-sized their finances?

JEREMY MAGGS: Just a final one, let me pivot slightly to another issue. You’ve also called over the past couple of days for, and I quote, a swift national response to give Cape Town greater policing authority. Mayor, is this about crime fighting or is it also about taking control where national government is failing?

GEORDIN HILL-LEWIS: Yes, the police are unfortunately another national institution that is under tremendous pressure and is showing signs of failure and most acutely in the investigation of crime.

Read: SA’s police are losing the war on crime [2023]

The reason that it’s very tough to get a handle on crime in South Africa, and in my of neck of the woods here in Cape Town, is because detectives are utterly swamped and so they can’t pay attention properly to important cases.

Those cases are almost invariably, in fact, in our city, in gun crimes, 95% of those cases are thrown out of court, and those people are back on the streets in no time at all doing the same crimes.

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Believe it or not, Jeremy, there is a very strong correlation between putting criminals in prison and crime coming down.

So if we can just make sure that we get actual convictions and make sure that those people who are guilty of repeat gun crimes are actually put away, you will start to see the benefit.

We’ve called for that investigative aspect of those powers very urgently, because that is really where the whole system is falling down right now.

JEREMY MAGGS: I’m going to leave it there. My thanks to Mayor Geordin Hill-Lewis from Cape Town, appreciate your time today. Thank you.

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