Eskom: we’re light years behind, so pony up

I was recently approached by the editor of Proud!, the new magazine of the dysfunctional protectionist cartel, Proudly South African. The brief was to write a piece about the great innovations in telephony at our telecoms incumbent Telkom. Stifling a laugh, I listened to the offer: work for half my usual rate, and use my byline to “lend the piece some credibility”. Naturally, I declined. Not so some other writers, one of whom penned a piece cheering South Africa’s electricity infrastructure. Apparently, it was “light years ahead”. I was unable to find out exactly how, because just at that moment the power failed, and the only light in the room was from my gas heater. (The content of this glossy brochure, bankrolled by the few remaining companies who pay Proudly South African for marketing, is only available to people who buy it at retail.)

Now there’s a new plan: given the exceptional service of Eskom, the monopoly electricity utility, why not raise prices? After all, other countries tax their energy use into the stratosphere. Why should a developing country with high unemployment and poverty rates pay less than Finland, Sweden or Canada?

Now in principle, I would agree that higher demand should lead to higher prices, so that suppliers have a signal and incentive to meet that demand. But this is a price-regulated public utility. There’s no such thing as a price signal. There were plenty technical reports that warned of rising demand and a supply crunch, but they were flatly ignored. Besides, a utility’s purpose is to use taxpayer money to provide a quality service at a universally affordable price. Not only doesn’t it provide a quality service, but remarkably, it showed 50% profit growth year on year, to R6 billion on revenues of R40 billion. I guess anything is possible when you’re funded by taxpayers and have a legal monopoly on an essential service.

Now, after years of denying that there was a crisis, Eskom is finally proposing to invest in new generation infrastructure. Great. Late, but great. But just look at the follies that are included in the shopping list. Among them, “the utility planned to develop the world’s largest solar thermal power plant capable of generating 100MW, subject to technical and commercial feasibility”. Since that represents just over one thousandth of the power SA consumes, I trust the “world’s largest” extravagance is also dirt cheap. Commercial feasiblity strikes me as a little fanciful.

This is from the same organisation that claims its own “customer service index - a broad measure of customer satisfaction and service perception - increased from 86.3% in 2006 to 87.1%”. Tell that to the people whose electricity went out so regularly in the last year or two. Or the entrepreneurs whose home offices were powerless for hours and days on end. Or the businesses, for whom spoiled food and lost trading hours cost millions - maybe billions. I guess they weren’t surveyed. I wonder if anyone was surveyed, come to think of it; I can’t even get a regular electricity bill out of them. But then, if Proud! is anything to go by, some people will believe just about any propaganda.