Eskom to give poor South Africans more free power

Eskom wants to increase the basic free electricity allocation to poor households from 50 kilowatts to between 70 and 100 kilowatts next year, chief executive Jacob Maroga said.
"The current discussion is increasing it to 70 or 100 kW," Maroga said.

He told in Cape Town the struggling electricity supplier had included this proposal in its tariff increase application for next year, which was submitted to the National Electricity Regulator of SA (Nersa) at the end of September. Maroga declined to divulge the price increase Eskom had asked Nersa to approve for next year, saying this would only become public once the country's 283 municipalities had commented on the application.
Media reports have said Eskom applied for a 40 % increase, after putting up the power price by 31.7 % this year. The company submitted an increase application for the next three years, of which the first hike would come into force in April next year.

The chairwoman of Parliament's portfolio committee on public enterprises, Vytjie Mentor, told Maroga she would not allow him to put a precise figure to MPs as it "can create consternation or whatever in the public".
Maroga told the committee that Eskom had begun the process of renegotiating long-term derivative-based contracts with clients with aluminium smelters to untie its supply price from commodity prices. So-called embedded derivatives accounted for most of Eskom's R 9.7 bn operating loss last year as aluminium prices plunged during the global economic crisis.

Maroga would not comment on how these clients, notably mining company BHP Billiton, had reacted to its plans to rewrite long-standing deals.
"We stated our intention -- we want to relook at the contract. It is still too early to make any comment," he said.
Public enterprises minister Barbara Hogan said in September she believed the contracts could be restructured, telling: "You can always negotiate again."

Maroga added, however, that the process was a delicate one as the company did not want to lose credibility with clients. He said Eskom currently had spare capacity of an average 10 % and coal stockpiles for about 42 days. Ideally, the company needed spare capacity of at least 15 % but could only hope to achieve this in five years' time, he said.
Whether this would be the case was a balancing act between demand and capacity, which meant that consumers had to remain aware of the need to use electricity judiciously.

Deputy minister of public enterprises Enoch Godongwana challenged Maroga's assurances to the committee that energy supply had been secured and that the country would be spared another bout of blackouts as seen in early 2008. He said coal supply and quality remained real concerns.
"I would not be as enthusiastic as Mr Maroga is about security of supply," he warned, adding that he wanted to remind the Eskom chief that he had a duty to run the company in a "sustainable way".

Internal Eskom communications leaked by the opposition in September exposed grave concerns aboutthe way in which the company managed its coal stocks and supply contracts.