Exposed: Municipalities have diverted billions from the poor, depriving them of free basic electricity
A new electricity scandal has erupted in South Africa. Only two in every 10 poor households that qualify for free basic electricity have received it for at least the past five years, with municipalities diverting at least R40bn earmarked for indigents. This has been highlighted by Chris Yelland, one of South Africa’s top energy analysts. He speaks to BizNews about how it is very difficult – and often impossible – for poor people to register for free basic services and raises the questions about how it is possible that the authorities – from the National Treasury to municipal officials – have not raised the alarm about this situation. – Jackie Cameron
Chris Yelland is managing director of EE Business Intelligence.
A new research report published by the Public Affairs Research Institute reveals that in the 2019/20 financial year alone, about R9-billion budgeted and disbursed by National Treasury to local government for the provision of free basic electricity (FBE) to the poorest of the poor has been misappropriated by municipalities.
The report,
Broken Promises: Electricity access for low-income households – good policy intentions, bad trade-offs and unintended consequences, by Dr Tracy Ledger, further shows that in the six financial years from 2014/15 to 2019/20, about R38.3-billion disbursed by National Treasury for FBE to indigent households failed to reach the intended recipients, and was instead used by municipalities for other unauthorised purposes.
Source: Eskom’s 2020/21 proposed retail tariff plan
Second, because existing tariffs are largely variable-usage based (charged per kilowatt-hour), Eskom argues that they do not adequately “reflect the fixed costs and also the demand a customer imposes on the network”.
As customers move to solar, Eskom contends they could become a “zero net or very low net” consumer as they feed excess power back into the grid during the day. Because they still use the network, this resultant “loss of revenue” will not be commensurate with a reduction in costs.
Eskom says “it also results in customers with PV being subsidised by customers without PV”.