e-spaces

November 28, 2008

By Roy Cokayne

Pretoria – Property owners are concerned about the planned electricity penalty charges, describing them as “unfair” and saying that they would lead to people going out of business.

Douw de Kock, the chairman of the energy efficiency task team of the SA Property Owners Association, said regional shopping centre owners would be affected by the penalty charges in the electricity use threshold in the second phase of the energy conservation scheme (ECS), but it would exclude other shopping centres, which was unfair.

De Kock said the proposed penalties would amount to millions of rands that would have to be passed on to tenants in malls.

Dean Goddard, an energy and environmental consultant at Growthpoint, South Africa’s largest listed property fund, said the penalties proposed were “a bit draconian and will put people out of business”. He suggested that more consultation was necessary.

Goddard said the retail sector was already taking strain as it had to absorb the electricity price increase this year.

“Next year Eskom wants to put up tariffs by another 30 percent, but is going find the consumer base [will not] be able to carry it,” he said.

“Eskom needs to consider the stark reality of the international economic crisis we are entering … We cannot load retailers any more.”

Goddard said the mining and agriculture sectors were expected to achieve electricity savings of 8 percent, industry 10 percent, commercial sector 20 percent, residential 20 percent and state-owned buildings 25 percent.

The period to base the electricity saving on is from October 2006 to September 2007.

“The problem is that if you do not control [electricity] demand, the penalty is an additional 4.6 percent to your bill in the first month, 6.4 percent in the second month and 8.3 percent in the third month,” he said.

Kannan Lakmeeharan, the managing director of Eskom’s system operations and planning, said the programme was not about penalties but about electricity savings.

He said Eskom had done the preparatory work on the ECS on behalf of the government and this had been submitted to the National Energy Regulator of SA (Nersa).

It was up to Nersa to decide on the process.

The initial deadline for Nersa to issue a document for public comment was the end of this month, but the deadline was likely to shift, he said.

Charles Hlebela, the head of communication and stakeholder management at Nersa, confirmed yesterday that all proposed power conservation programme rules – which included rules for energy conservation, trading of energy allocations and energy growth management – had been submitted to the regulator for consideration.

Hlebela said Nersa was busy with its analysis of the draft rules, which would then be submitted for consideration before being published for public comment.

“Nersa cannot at this stage give a definite indication of when the draft rules will be published.”

Lakmeeharan said the initial phase of the ECS would apply to a very limited number of customers and would take six months to roll out. The second phase would be implemented only up to a year later.

He said the economic downturn had affected production and electricity demand, but predicted that production would increase very quickly, as soon as the commodity cycle turned.

“What that does is give us an opportunity to responsibly phase in and lock in energy efficiency measures. The focus is on energy efficiency and it must not affect production levels,” he said.

Lakmeeharan said Eskom would not have a claim on income derived from the penalties and it was up to Nersa to decide what the extra money would be used for.