SA electric prices may increase, hindering tech

South Africa’s main power utility Eskom wants electricity prices to be increased yearly for the next five years, spelling trouble for the country’s tech population.

Eskom – which produces 95 percent of the country’s electricity supply – submitted an application to the National Energy Regulator of South Africa (Nersa) on Friday, asking for approval to increase electricity prices 16 percent per year for the coming five years.

The increase is broken down into a 13 percent increase to meet the utility’s own needs, and 3 percent to enable the entry onto the market of independent power producers.

This would see actual prices rise from the current rate of 61 cents per kWh, to 96 cents per kWh (factoring in inflation) by 2017/18.

The Multi-Year Price Determination (MYPD) currently in force was implemented by Nersa three years ago, and comes to an end on March 31, 2013. As such, the new tariffs – should Nersa approve them – will be effective as of April 1, 2013.

The company explained that the logic behind the increase in tariffs is aimed at ensuring that all the costs of electricity production will be covered by the rates demanded over the coming years – Eskom’s current tariffs being unsustainable. Chief Executive of Eskom Brian Dames said in a press statement: “We seek to ensure that Eskom can cover the costs of supplying the electricity needed to power South Africa and invest in the future.”

He added: “We are planning for a growing and successful economy… For that we need to continue to invest in the electricity infrastructure which can support higher rates of economic growth and development and extend access to electricity to all South Africans.”

However, with computer usage being pushed in South Africa – computing lagging behind mobile penetration rates -, the increase in electricity tariffs will translate into significantly higher outgoings for the country’s population which is increasingly trying to get to grips with information technology; thus potentially hindering the wide-spread roll-out of IT use across the country.

The country is battling against a recognised “digital divide” which sees access to and ownership of ICT facilities divided according to race, social factors, and geographic location. Computer ownership has seen minimal increases over the past decade; with 8.6 percent ownership in 2001, rising to 15.7 percent in 2007 (these being the latest figures available according to a UNICEF report from May of this year).

Dramatically increasing electricity prices will do nothing to encourage the spread of computing in the country. This is also an issue as the government continues to push for increased teaching of ICT and use of computing facilities in schools across South Africa.

With South Africa gearing up for the switch over in television transmissions from digital to analogue, increased electricity prices will similarly not go down well as users will be forced to power the necessary set-top boxes to catch digital signal.

As such, while the country’s main power utility may wish to increase its profits, the rate of increase suggested in its application to Nersa is too onerous to support concurrent initiatives being played out across the country, and certainly will not help to improve computer literacy and ownership in South Africa.

Posted in: Internet

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