Cut in electricity subsidy for poor targeted

Cape Town mayor Dan Plato is to meet Public Enterprises Minster Barbara Hogan to discuss the city's subsidy to Eskom to provide free basic electricity to households, a subsidy that costs the city more than R100-million.

Plato said that, to be fair to all indigent electricity users in Cape Town, the mayoral committee had recommended to the council that the city amend its policy of subsidising Eskom to provide free basic electricity to users in the Eskom supply area of the city.

About one-third of consumers in the metropole, mainly in rural areas, Table View, Khayelitsha and Parklands, buy electricity directly from Eskom, and the rest buy through the city council.

"It is recommended that the city reduce its subsidy to Eskom to provide free basic electricity to Eskom customers who use less than 250 kilowatt hours per month, and not to those who use less than 450kW hours, as it used to do," said Plato.

He said he would meet Hogan to discuss the issue.

"I've asked her to intervene for funding to fill the gap," Plato said.

In the meantime, the city will continue to provide free basic electricity to its own customers who use less than 450kW hours a month.

Plato said Eskom had changed its tariff structure so that domestic customers using more than 150kWh a month were paying significantly less than the equivalent City of Cape Town customers.

"The city therefore needed to review its free basic electricity subsidy to Eskom, so that the city's subsidy to Eskom did not result in Eskom's customers paying less than the city's own customers," he said.

Mayoral committee member for finance Ian Neilson said that all municipalities in the country subsidised Eskom by about two cents per kilowatt.

"Those two cents might not seem like much, but it's around R120-million.

"And the city is one of Eskom's biggest customers and it should be subsidised," Neilson said.

The ANC's Raymond Mrawu said the city should charge a cheaper tariff for everyone.

"I don't know why the city doesn't change. Eskom is more sympathetic to the poorest of the poor.

"It's very important for the city to follow Eskom," Mrawu said.

Cynthia Clayton of the Independent Democrats said electricity had become so expensive that the meter boxes in homes in her area had become like televisions.

"People are watching their boxes more than TV. It's a total rip-off for the poor. We're actually going backwards," Clayton said.

The city's new system slots consumers into a tariff band according to the amount of electricity they buy.

The basic price of electricity increased by an average of 25 percent at the beginning of the month, but several consumers the Cape Times spoke to have found that their bills have increased by 60 to 70 percent.

A pensioner in Gordon's Bay found herself paying 93.31 cents per unit compared to 53.31 cents per unit before the tariff change.

"A unit is equal to 1 kilowatt-hour (kWh).

"I was told by the municipality that if you purchase more units than you normally use, you will be placed in a higher band," she said.

A man in Claremont found himself in a similar situation.

"I would urge all pre-paid users to check their new costs of power, mine increased from 61 cents per unit to 106 cents per unit, a far cry from the 25 to 35 percent announced," he said

"Energy has become more expensive than it used to be and people need to understand that the more they use, the more they will be charged.

"Free basic electricity is still there for lower users," Neilson said.

Neilson said people needed to change their lifestyles and make use of cost-saving measures.

Jolene Henn, Eskom's regional communication and stakeholder manager in the Western Cape, said that all those customers within its electricity supply areas consuming up to 450kWh per month did receive free basic electricity.

"Eskom's direct domestic customers pay less for electricity than the city's, depending on the tariff and consumption level," she said.

- Cape Times

Zuma begins hopeful plan for solar geysers

President Jacob Zuma today launches the government's roll-out of solar water heaters, a programme that industry insiders say is dogged by weak installation capacity and manufacturing problems, chiefly high raw material prices coupled with cheap imports.

The government is targeting the installation of 1 million new solar water heaters by 2014 in what has become a priority industrial sector for a country with dire energy shortages and chronic unemployment.

Zuma is due to launch the programme's first mass-based project, a 7 000-unit installation at Winterveldt in Tshwane, which forms part of the 200 000 solar water heaters that the Department of Energy says should be installed by the end of this fiscal year.

Terry Billson, the technical director of energy efficiency specialist Genergy, which installed 2 500 low-cost solar water heaters in Khuyasa, Cape Town, said 1 million units was an "ambitious" target and would involve a massive deployment.

"There are some challenges, and the biggest is installation capacity," Billson said, indicating that installing solar water heaters was more complicated than the connection of a conventional electric geyser.

"There is not sufficient capacity on the scale that the minister of (energy) is talking about. We need a major investment in training initiatives," Billson said. "It's a challenge, but it's also an opportunity to create employment."

Dylan Tudor-Jones, the owner of Solar Heat Exchangers and chairman of the solar heating division of the Sustainable Energy Society Southern Africa, said three service providers were currently involved in training. But courses for training plumbers were "very expensive to run" and would require subsidisation because of low returns.

Assuming one team was to finalise three installations a working day, it would take about 280 teams five years to reach the government's 1 million unit target.

Billson warned that raw material costs locally, particularly for stainless steel, would have implications for domestic production of solar water heaters, a key tenet of the government's industrial policy action plan. Meanwhile, China was exporting competitively priced, low-pressure systems that could be installed in South Africa for just under R4 000.

The government had indicated previously that it would rely on imports of solar water heaters this year but would shift buying as local manufacturing capacity kicked in.

Richard Worthington, the climate change programme manager at WWF South Africa, said the environmental group hoped local manufacturing would ramp up by next year "but at this stage, given the lack of clarity and implementation in general on solar water heaters, we'd emphasise the urgency of scaling up. If we continue with substantial imports into next year, it's probably justified because of lower electricity usage."

The installation of 1 million solar water heaters is expected to save approximately 650MW of electricity demand. The minimum potential South African market is estimated at 5 million households.

Asked whether 1 million solar water heaters was an ambitious target, Worthington said: "Given the lack of implementation to date, it becomes more ambitious by the month... 1 million (units) for 2014 isn't too bad, provided there's another 1 million in the following two years."

WWF is campaigning for the Kusile coal-fired power station to be put on hold, believing solar water heating should be rolled out on a scale to significantly lessen the need for the next large power station.

The focus of the government's solar water heating initiative up to now has been on Eskom's subsidies for solar water heaters pitched at upper-income households that can afford the capital cost of their solar geysers. The Eskom subsidies effectively doubled in January.

By the end of March, Eskom had received 4 206 reimbursement claims, a third of which were from Gauteng, spokesman Andrew Etzinger said.

- Business Report

Mad rush for solar geysers as subsidies rise

The number of households that have taken up Eskom's solar water geyser subsidies has rocketed in the past month since the utility more than doubled the geyser subsidy from around R2,500 to around R7,000. This means that almost half of the cost of the solar geyser will now be covered by Eskom.

When Eskom launched its solar water subsidy programme at the start of 2008, it aimed to subsidise 1 million geysers nationally over five years. But in the first two years of the subsidy's being in place, only 2,000 households had taken up the offer.

After Eskom announced the big subsidy increases in mid-January, it received 762 applications for subsidies in a month.

About 40 percent of a household's electricity bill goes to pay for heating the geyser.

"With the increased subsidies, Eskom pays almost half the cost of the solar geyser. We were motivated to increase the subsidy by a growing concern that we needed to save electricity more aggressively," said Andrew Etzinger, a general manager at Eskom. "We need to get 200,000 installed a year.

"With the bigger subsidies, the householder will recover his investment within five years, and then be getting free hot water."

Etzinger said the electricity saving on a million solar water geysers would amount to 650MW. This is equivalent to one third of the power generated by Koeberg's two nuclear reactors.

The money to pay for the subsidies will come out of Eskom's electricity price hikes.

"It was part of our demand-side management programme, which formed part of the application to Nersa, so the cost will be recovered through the new tariffs.

"It is a lower cost alternative to building a new power station."

The amount of the subsidy varies in relation to the amount of electricity the geyser saves. Those which save the most receive the highest subsidy. All have to be SABS approved

"Householders can go online to www.eskom.co.za/dsm and they will see suppliers in their region and different makes and sizes.

"You choose a supplier, he installs the geyser, you pay the full cost and you both fill in the form he has. You send this, with proof of residence, to the Deloitte branch in your area, and if it is all correct, the turn-around time to get your subsidy is two weeks," Etzinger said.

- Cape Times