A former Eskom executive director on Wednesday shot down the energy provider’s proposal for an annual 16% electricity price hike for the next five years.

Mike Deats said Eskom had failed to address some important issues in its Multi-Year Price Determination (MYPD) 3 report, which could see the price of electricity go up until 2018.

“What happens after 2018?” he asked at a National Energy Regulator of SA hearing in Midrand.

Deats highlighted a project proposed by Eskom which would see it needing to transport coal from the Waterberg coalfield. “Coal trucks are damaging the roads, but they have failed to start on plans to build the railway lines.”

He said Eskom was still a long way from completing some of its projects, because it was waiting for funding instead of creating a system whereby the project would pay for itself.

SA Chamber of Commerce and Industry CEO Neren Rau said the chamber had conducted a survey to see how businesses felt about the proposed hike. He said most understood a price increase was necessary.

“Sixty-six percent of businesses indicated that they would be willing to accept a five to 10 percent inflation rate.”

However many said they would need to scale down their businesses and reduce their staff complement to stay afloat during the 5% to 10% hike.

Eskom had applied to Nersa for an electricity price increase of 16%/year for the next five years. This would more than double the price of electricity over five years, taking it from 61c/kWh in 2012/13, to 128c/kWh in 2017/18.

Earlier, Eskom finance director Paul O’Flaherty told the hearing it needed the increase to maintain revenue and cover operating costs, among other things.

He said if Eskom merely minimised operating costs, as had been suggested, the servicing of machinery would be neglected and there would have to be massive staff reductions. — (c) 2013 NewsCentral Media