Well, it turns out that Eskom got expert analysis six months before pointing out the rampant mismanagement and incapacity at Eskom’s Generation Primary Energy (GPE) – responsible for keeping the (coal) fires burning.

The DA received a copy of a confidential memo spelling out all the problems at GPE.

The DA has subsequently also called for a formal inquiry into Eskom’s management. We also tried to table the memo in Parliament’s Portfolio Committee on Public Enterprises and ask Eskom CEO Jacob Maroga about it, but the chairperson of the committee, Vytjie Mentor (ANC), refused to accept the document and shielded Maroga from answering questions on the matter.

And then Eskom management wonder why people get upset when Maroga gets a 27% salary increase.

The parastatal last week reported a R9.7 billion loss for the last financial year.

In 2007/8 Eskom had to be bailed out to the tune of R60 billion.

“It appears that Eskom needs an additional R 283 billion for its capital expenditure program,” said DA Shadow Minister of Public Enterprises Manie van Dyk. “As a consequence, it seems likely it will once again have to be bailed out, a cost that will be borne by the South African taxpayer.”

Van Dyk said Eskom’s results called into question whether government was either willing or able to manage SOEs to the benefit of the public, and whether it was not simply a way to entrench the system of cronyism that was eating away at the social fabric.

“The awarding of bonuses to senior management, despite the financial crisis, exacerbates Eskom’s situation,” he said.

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“The Democratic Alliance (DA) has stated repeatedly that a tariff hike of this nature will have vastly detrimental consequences for South Africa’s poorest citizens, and we are deeply concerned that government is sitting idly by while the fundamental problems within Eskom, and the energy sector more broadly, are not adequately addressed.”

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The electricity supply and its pricing are crucial in determining the competitiveness of our economy. This uncertainty has a hugely detrimental effect on service delivery and on South Africa’s attractiveness as an investment destination.

Read the full statement on the DA’s website >>

Regrettably, the proposal has now been shelved. The private members’ legislative proposals committee gave it tentative support and recommended that an ad-hoc committee be established to further examine our proposal. This never happened, but a debate on the matter was held in parliament last week. The proposal is for the moment dead, but we intend to revive it when the new parliament is established in May.

This legislative proposal was opposed by the Department of Minerals and Energy because it believed that the required legislation for a feed-in-tariff was already in place. As I said in the debate last week, the question then is why has this country made practically no progress on renewable energy in the last decade. It is because the South African government is fixated with large state-driven energy projects which limit choice and have, in effect, contributed to undermining GDP growth. Further, it is because our state energy planners believe that, just because we have 200 years of coal reserves available, we have to use these resources. Not only is this latter view nonsense, it is irresponsible.

The subject of the appropriate role of the state is often debated in parliament, yet this debate has not been sufficiently directed at the role of the state in the energy economy. Naturally there is an important role for the state in conducting integrated energy planning, something which has been severely lacking over the last decade, and which has been a major cause of insufficient generating capacity during several periods over the last three years. However, the state, more particularly Eskom, needs to understand that it cannot be the sole producer of electricity to satisfy the needs of a growing economy – it does not have the skills, nor does it have access to the required capital.

The DA believes that the state’s primary role, besides planning, is to appropriately regulate the energy sector and to provide incentives for an increased number of players in electricity production. Yes, it will be necessary for some time to come that Eskom remains the primary generator of electricity. However, it is the policy of the DA that the natural monopoly of transmission needs to be unbundled from the potentially competitive activity of generation. Eskom’s transmission division must be transformed into a separate state-owned company to ensure that all sector participants receive equal access to the national grid.

And this is where the feed-in-tariff for renewable energy will truly thrive. It will allow a massive increase in micro-generation, increasingly giving individuals, businesses, and rural communities that are currently off-grid, improved energy independence. The feed-in-tariff for renewable energy is a sensible and progressive policy.

Renewable energy must not be treated as an afterthought in energy planning. It must become central to energy planning. The DA believes that a target of 15% of electricity generation from new renewable energy sources is achievable by 2020. Not only will a renewable energy revolution help to mitigate climate change, it will also be a source of new “green” jobs.

A 2008 report from World Watch entitled “Jobs in Renewable Energy Expanding” shows the potential for new job creation. There are, for example, 259 000 jobs in the renewable energy sector in Germany.

South Africa can be one of the top ten producers of renewable energy in the world, and we can create new jobs in the thousands as well.

The feed-in-tariff for renewable energy is the way to stimulate this market. But not only is the existence of the tariff important, but the tariff must be set correctly. NERSA currently has proposals on a feed-in-tariff up for discussion. We must thank them for trying; but regrettably, the tariff proposals are far too low and will not offer the required stimulus.

I believe that parliament must be centrally involved in providing a specific legislative framework for renewable energy and that the state, whether DME, Eskom, or NERSA, should not be left alone to manage these matters. Hence the proposal will be revived at the earliest possible opportunity.

A couple of MPs from various parties have decided to take a stand on this matter. Dr Ruth Rabinowitz (IFP), myself (DA), Lance Greyling (ID) and Judy Chalmers (ANC) have come up with a private members legislative proposal aimed at introducing Feed In Tariffs for renewable energy production. The proposal has gone forward in the name of Dr Rabinowitz.

Feed in tariffs took off in the early 1990s in Germany. They have resulted in a huge uptake of renewable energy in countries where they have been implemented.

Essentially the concept entails the energy utility (in our case Eskom) ensuring private providers of renewable energy a fixed tariff to feed energy into the grid for a fixed period of time. It fosters entrepreneurship, creates jobs, offers certainly to the industry, encourages provision of energy other than conventional coal fired for rural areas and helps clean up the environment. Minister Manuel has stated that he is not convinced of the economic case for large scale Renewable Energy projects in South Africa. The focus remains on nuclear and coal fired power stations. Yet there is convincing evidence that we have the world’s best site for generating a solar thermal power plant right here in the Northern Cape. Solar heating should be routine and solar photovoltaic incentivised, along with many other forms of alternative energy such as geothermal, biomass and biodiesel . Currently there is no integrated vision or strategy to fast track development of a Renewable Energy industry in our country although we have a plentiful supply of free solar energy for most of the year. Hopefully our introducing this Bill will be a wake up call to Ministers who should be driving the Renewables programme, to which they largely pay lip service. The recently adopted Energy Bill made scant mention of Renewable Energy, without targets or clarity on where responsibility for it would rest. With the best climate in the world, we lag far behind Europe and even the UK, which has recently adopted FIT legislation.

The 2003 White Paper on Renewable Energy set a target of 10 000 GWh hours by 2012. Currently we produce 53.8GWh from Biofuels and 148.2 GWh from other sources, a far cry from the recommended target, in spite of our Cabinet-approved Climate Mitigation Strategy.

One of the technologies that could benefit greatly from feed in tariffs is Concentrated Solar Thermal Power (CSTP). The greatest barrier to the establishment of CSTP in South Africa seems to be the cost of the technology. This manifests itself in the price of electricity generated from it. However, CSTP technology is projected to experience cost reductions along a learning curve with cumulative global deployment, and the price of electricity in South Africa is projected to rise as a result of the national electricity crisis. Electricity generated from CSTP becomes competitive with South Africa’s average electricity price after 2020-2025, and is already competitive with South Africa’s peaking electricity price today

According to a recent Oxford Masters thesis by Max Edkins, electricity generated by today’s CSTP technology, supported with carbon trading and Tradable Renewable Energy Certificates (TRECS) financing, is competitive with peak and intermediate-load electricity prices from newly built fossil-fuelled power plants, as well as with existent and new diesel-fuelled Open Cycle Gas Turbines, such as the Mossel Bay, Acacia, Atlantis, and Port Rex ones, some of which are run up to 8 hours a day or more. Today’s CSTP technology could also generate electricity at a cost lower than what Eskom is offering to pay Independent Power Producers between 06h00 and 20h00 under their Pilot National Co-generation Programme.

Encouraging CSTP would also contribute to South Africa’s target of reversing its carbon emissions growth by 2020-2025. International climate change financing can be encouraged in developing the technology of CSTP, and South Africa can and should aim to gain from the renewable energy, in particular CSTP, investments being seen today, which likely to continue into the future.

Dr Rabinowitz noted at the press conference at which the legislative proposal was presented to the media that our group has been enthusiastically supported by people in SANERI, NERSA, the renewable industry and a host of energy think tanks and NGO’s. Now all that remains is to keep up the momentum and get this bill passed in parliament. We hope that the Minister of Minerals and Energy will be one of our backers.

In light of the downgrading of Eskom by Moody’s Rating Agency, and pending ratings by Standard & Poor’s and Fitch rating agencies, the Democratic Alliance (DA) calls on the government to provide a clear plan on how it is going to help Eskom raise the R343 billion for its capital expansion programme without resorting to tariff increases.

Government is the only shareholder in Eskom and should thus adopt actions that will bolster the utility’s plummeting credit rating, and ensure that the South African public is receiving the service from Eskom it deserves.

It is a matter of concern that the downgrading comes at a time when the business community and South Africans are reeling from soaring food and fuel prices – any further tariff hikes by Eskom will negatively affect our growth prospects.

Eskom is furthermore in the midst of a major capital expansion programme. One of the prerequisites for economic growth in any industrialized economy is the presence of predictable and sustainable electricity supply.  In the long run, not being able to ensure a steady supply of electricity will pose a threat to South Africa’s growth prospects.  Besides this, power outages cause congestion, disrupt business activities and inconvenience millions of South Africans.  The Government must therefore take immediate action to ensure that Eskom’s capital expenditure programme is not compromised by the credit or investment downgrading.

There is no doubt that the power outages that South Africa witnessed at the end of last year are the outcome of government’s neglect of our electricity generation infrastructure over the past decade, which has resulted in a situation whereby we have insufficient reserve margins to cope with routine failures.  The DA therefore calls for the government to abandon its usual laissez-faire attitude and immediately release the first tranche of the R60 billion it committed to Eskom – and allay fears over insecure funding for the power utility.

The DA is strongly opposed to any unjustifiable tariff hikes as these are likely to have a substantial effect on inflation and hence monetary policy – with vulnerable members of society taking the brunt of such increases, even as they are already suffering due to the escalating prices of food and fuel.

The Government must urgently explain how it will assist the energy utility as certainty on government plans will bring confidence in the utility’s funding situation and save it from further downgrading from pending ratings.

Eskom phones in with latest ransom demands

PRETORIA. After months of inactivity and minimal load-shedding, rogue utility company Eskom has come out of hiding to deliver its latest demands. According to a government spokesman, Eskom called in using a disposable SIM card, demanding R5 billion in unmarked R50 notes and threatening to black out the country again if it saw any police at the drop-off point.

Click to continue reading at Hayibo.com.

“South Africa is one of the most carbon-intensive countries in the world and it is incumbent on this country to reduce its emissions in the future in order to play its role in stabilising the world’s climate,” said DA environmental affairs spokesman Gareth Morgan.

While cautious of the additional costs placed on business by carbon taxes, Morgan said they were essential for the creation of a price for carbon, which was a prerequisite for creating a carbon market. He added that they should be introduced gradually to allow businesses to adjust, and in conjunction with other fiscal measures that would reduce the costs of doing business in South Africa.

Morgan also appealed for the revenue from such taxes to be ring-fenced for projects involving renewable energy, energy efficiency, and research and development.

“Ring-fencing of taxes is seldom done but if government is going to induce behaviour-change then producers and consumers must have the assurance that their taxes are being spent on projects that will reduce the country’s carbon footprint.”

He also said that government needed to allow the private sector to flourish in sectors that it previously could not.

“Breaking the Eskom monopoly and introducing feed-in tariffs for renewable energy could unleash a wave of investment into clean energy,” said Morgan. “It would also allow consumers of electricity greater choice in whom to buy electricity from, giving them more options to reduce their individual carbon footprints.”