Submissions on the establishment of a National RED and viabilty thereof

1. Submissions on the establishment of a National RED and viabilty thereof

2. Presentation Index • Introduction • Position on Restructuring Objectives • Economic development • Employment security and career development • Position on national RED and viability • Overall conclusion

3. Introduction • Solidarity confirms its support for the overriding objectives of the restructuring process - as initially recorded in the 1998 White Paper and reaffirmed in the Blueprint of 2001 authored by the Department of Minerals and Energy.

4. Solidarity comments on key objectives • To provide low equitable electricity tariffs to all consumers • We support a structure for the electricity industry that will ensure low equitable tariffs - which we associate with economies of scale, special attention to the needs of smaller towns and rural areas, maximum use of existing infrastructure, and support for existing proven capacity in Eskom.

5. Solidarity comments on key objectives –cont. • To provide quality supply and service to all customers, in support of the government’s economic and social development plans • We especially note the importance of supporting economic growth and social development - and we note the differing aspects of these issues between metros and the smaller towns and rural areas.

6. Solidarity comments on key objectives- cont. • To meet the country’s electrification and free basic electricity targets • We support a structure that gives emphasis to the very different issues of rural and metro electrification.

7. Solidarity comments on key objectives –cont. • To meet the legitimate employment, economic and social interests of all employees in the sector, and ensure their safety • We support a structure that provides employment security and career opportunity to all industry employees - and we note the key issues of employment security and career opportunity in smaller towns and rural areas which have very different issues to those of the metro areas. We require an industry structure that will focus on the economic needs of non-metro areas - with support for employment and social stability in these areas.

8. Solidarity comments on key objectives –cont. • To operate in a financially sound and efficient manner, in order to provide a reliable and sustainable future for both consumers and employees • We note that the industry is clearly viable as a public sector essential service. Ultimately industry and domestic customers will pay the required price, subject to support for the poorest citizens. Cross-subsidies between consumers will assure the viability of the 6 metro REDs and separately the National RED as solutions to South Africa’s metro and non-metro challenges.

9. Economic Development • Solidarity notes that many of the key economic issues in South Africa today are represented in the split between economic and social development in metro vs. rural areas (including smaller towns). It is clear that the structure of the electricity industry must be aligned to the very different requirements of large urban and smaller urban/ rural communities. • Solidarity has more confidence in a separation of responsibilities between metro REDs addressing the needs of metro areas, and non-metro National RED with national support to address the needs of smaller towns and rural areas.

10. Employment Security & Career Development • Solidarity notes that the issues of employment security and career opportunity especially affect the workforce of smaller towns. Economic development and opportunity in rural areas is continually threatened by migration of skills to the big cities. Solidarity assumes that the 6 metro REDs will provide the support required in large urban areas, and we support a National RED especially aligned to the needs of staff and employment in the smaller towns and rural areas.

11. Position on national RED and viability • Solidarity believes the industry is viable • It is clear that the industry is viable. There are, today, significant areas of cross subsidy between industry and domestic, between urban and rural, and between all customers and electrification customers. These subsidies must continue for national equitable tariffs. We have confidence that the National RED is viable given that its customers have unique economic and social needs which must be supported by the entire South African industry.

12. Overall conclusion • Our overall conclusion is as follows: • The National RED as a Public Entity will be the best approach to use the existing and proven infrastructure of Eskom - instead of this being replaced by metro infrastructure • The National RED will address the very different employment security and career opportunity needs of staff in the non-metro areas • The National RED is viable as a support structure, with national cross-subsidies, for the needs of the rural areas and smaller towns