Comments to NERSA on Eskom’s Proposed Tariff Increase South African Human Rights Commission

1. Comments to NERSA on Eskom’s Proposed Tariff IncreaseSouth African Human Rights Commission JAMES MOTHA & YURI RAMKISSOON 22 January 2009

2. Introduction • The SAHRC recognises that Eskom requires financial support to enable Eskom to meet South Africa’s future energy demands. • The SAHRC is concerned about the impact of the proposed 35% tariff increase on the protection and promotion of human rights as enshrined in the South African Constitution. • Many people in South Africa subsist on marginal incomes or are unemployed.

3. Continued… • Recent national economic data shows the following: • Unemployment is increasing; • Companies are closing down because of the recession; • Government revenue is shrinking; and • The government deficit is on the rise. • If Eskom’s proposed tariff increase is implemented, it will further impoverish many people and exacerbate existing inequalities in South Africa

4. The SAHRC Mandate • The SAHRC ‘s comments are based on its constitutional mandate, • Section 184(1) states that the Human Rights Commission must: • Promote respect for human rights and a culture of human rights; • Promote the protection, development and attainment of human rights; and • Monitor and assess the observance of human rights in the Republic.

5. Importance of Electricity • Over 90% of households use electricity as their main source of lighting. • Lighting brings benefits such as increased leisure and study time for school children and greater security. • Electricity increases access to media, which in turn, increases awareness of current affairs and the availability of opportunities such as education. • 63 % of households use electricity as their main source of energy for cooking and refrigeration.

6. Continued… • A number of enterprises in SA were created as a result of electrification. • The 2001 census – 70% of all households use electricity for lighting and 50% for cooking. • A 2007 survey by Statistics SA show that 80% of households use it for lighting and 60% for cooking. • 20% of households still had no access to electricity at the time of the survey. • These households were almost entirely Black, almost all poor, and disproportionately but by no means entirely rural.

7. Continued… • Since 1994, the number of households has grown far more than the population • According to the DME, estimated costs to implement 3.4 million connections by 2013 was R21 billion in 1994 and a further R10.8 billion was needed for associated bulk infrastructure. • This projected target for connections does not allow for the provision of new households established since 2004. • The cost of completing electrification programme will therefore be much higher than anticipated.

8. A Human Rights Framework • Binding international human rights law and soft law must be taken into consideration. • The framework is as follows: • ICESCR - Article 11(1)- SA is a signatory and legally compelled not to defeat the object and purpose. • Declaration on the Rights to Development. • Declaration on Social Progress and Development.

9. The Impact of a Price Increase • The inclusion of economic and social rights in SA’s constitution requires government to adopt measures, within its available resources, which over time will result in an improvement in the quality of life. • There is no specific provision in respect of electricity in the Constitution, however, • Electricity is an important basic service- local government is obliged to provide concurrently with other spheres of government.

10. The Increase in Food Prices • Upward pressure on food price increases recently came from electricity. • Electricity prices have been driving PPI since the upward adjustment made by Eskom in 2008 and the first two quarters of 2009. • The 35% proposal or adjustment will have upward inflationary repercussions on producers as well as on consumer inflation.

11. Unequal Treatment of the Unequals • Poor households with access to electricity spend a far higher share of their income on electricity than those who are financially better off. • In 2005/06, the poorest 80% of households , earning less than R2 200 a month, spent 3.3% of their income on electricity; households in the richest stratum, earning more than R33 000 a month, spent 1.7% on electricity and used far more electricity per household.

12. Municipal Tariff Structure • The price of electricity between municipalities differs so people who are in similar economic conditions are subjected to different prices. • Wealthy households who are residing in municipalities that charge less have been paying less. • If the price is increased further without a uniform tariff structure, the differential treatment of poor people residing in the different municipalities will be problematic. • This situation contributes to the existing inequalities and further entrenches poverty. • Government cannot allow the price structure to favour the rich and further disadvantage the poor.

13. Universal Electrification • Target of universal access to electricity by all households by 2012/13 now seems unlikely to be met. • Those without electricity are the poorer households so the lack of access to electricity will affect quality of life and prevent poorer households from benefitting from FBE intended for poverty alleviation. • Poor households will not be able to afford the proposed 35% price increase. • If the 35% is approved, government must develop a clear and pragmatic plan on how to assist those who are unable to afford the increase.

14. Environmental Considerations • Section 24 of the Constitution of the Republic of South Africa. • SA is one of the world’s 15 highest CO2 emitters and is therefore a significant contributor to climate change. • Climate change leads to an infringement on s24 and other sections of the Constitution, i.e. the right to life, education, health etc. • CC further undermines all poverty alleviation and development strategies and affects the poorest and most vulnerable in society. • Impacts will be felt mostly in developing nations, particularly Africa, which lack skills and resources to deal with the impacts.

15. Recommendations • Diversification of energy-generation strategies is needed. • Nuclear is not the only option and should be implemented with extreme caution. • Great research and investment into renewable energy sources is urgently required. • Partnerships between Eskom, Government and civil society is essential in implementing diversified strategies. • Specific commitments to a climate change strategy should be made.