In answer to my questions
>Q1)
>> isn't the laudable aim of the S.E.C.C. to
>> promote a great increase in consumption?
>
>Q2)
>> Doesn't that imply increased
>> electricity production?
>A1) Yes,
>A2) No,
but then the qualifications come thick and fast
>not on a net basis for society
well yes, on a net basis for society - an increase is an increase
>if we can combine it with a
>shutdown of the horrid energy-guzzling smelters
oh, wait, do you mean that to support the one demand you must support the other. That seems nonsensical to me. If there is a case for closing down SA's industry then you should make it. (But in the round it seems foolish to me to be arguing simultaneously for increased consumption and reduced production).
> which -- while
>consuming more than 50% of all eletricity -- create nearly no jobs
>and whose forex earnings evaporate to the London Stock Exchange where
>our main corpos now operate.
Tough on those 'almost not' employed, but the London stock exchange's expropriation of profits seems to be a question to be addressed separately.
>
>A3) And no, not if redistribution is the main objective,
Whoa ... where did that come from? Is this a revival of the 'labour fund' theory? I didn't realise that you had abandoned Marx for JS Mill. Since when was redistribution the goal? Redistribution of the existing consumption fund was always the reformist solution - and proved to be no solution at all, hopelessly unrealistic in fact. Tying consumption to what is affordable within the capitalist mode of production, but merely tinkering with the distribution of goods was Mill's aim that Marx so effectively rubbished.
>achieved in
>part through massive conservation by SA's morally-repugnant elites.
>Again, on water we've proven that pretty decisively, in relation to
>Africa's biggest public works project, the corrupt Lesotho mega-dam
>scheme (http://www.queensuc.ca/msp has an article on the preferred
>route--"demand side management"--in the form of a protest document we
>filed against the World Bank in 1998, plus their ineffectual
>rebuttals, and there's a new Ben Cashdan film -- "White Gold" -- just
>out on this very issue). On electricity, we debated this point a week
>ago with the government's main policy heavies. Here are some techie
>notes, if you're still interested in the gory details:
>
>(Also in today's news: the electricity company Eskom--against whom
>millions will go on a two day general strike next week--had its
>security firm kill at least two people yesterday in the Vaal, an hour
>south of Jo'burg, when the two joined a community group who resisted
>Eskom's disconnection of electricity due to the residents' inability
>to pay.)
>
>Notes (by Patrick Bond) from electricity policy
>panel debate, 16 August 2001
>
>These are my own notes (slightly expanded) about
>the lines of argument and rebuttal that emerged last
>Thursday evening.
>
>For the forthcoming Municipal Services Project
>study on Soweto electricity, which we anticipate
>releasing in coming days, we would very much like
>to include some of the points below. Any correction
>or amendment would therefore be warmly
>welcomed.
>
>In addition, it is our intention in the Municipal
>Services Project to continue to engage in friendly,
>constructive and vigorous debate, and we appreciate
>the efforts made so far, especially by Sipho and
>Gillian of hands-on video to call us all together to
>put our thoughts on record.
>
>Panel from electricity sector:
> Nelisiwe Magubane, chief director: electricity,
> Department of Minerals and Energy
> Xolani Mkhwanazi, chief executive officer,
> National Electricity Regulator
> Jacob Maroga, manager, distribution
>
>Panel from civil society:
> Neva Makgetla, senior researcher, Cosatu
> Virginia Setshedi, activist, Soweto Electricity
> Crisis Committee
> Wiseman Hamilton, Johannesburg Anti-
> Privatisation Forum
> Patrick Bond, Wits University associate
> professor and co-director, Municipal Services
> Project
>
>According to officials, South African electricity is
>characterised by the following four key
>accomplishments:
>
> 1) Eskom has electrified more than two million
> households since 1994. Substantial cross-
> subsidies exist between industry and households-
> -approximately R1,8 billion (including subsidies
> to mainly white farmers)--which have allowed
> this process to expand as far as it has to date.
>
> 2) Eskom offers the world's cheapest electricity
> to industrial users. The overall price of Eskom-
> supplied electricity fell by 15% from 1994-2001.
> One result is the attraction of major industries,
> such as aluminum, ferrochrome, and steel
> processing.
>
> 3) The present process of rationalisation and
> restructuring of the electricity sector will
> continue, with the objectives of more
> streamlined administration, economies of scale in
> distribution, adoption of commercial operating
> principles, establishment of a level playing field
> for Eskom's potential competitors, revenue
> collection through taxing Eskom, and imposition
> of rational (economic-based) pricing systems
> characterised much less by the debilitating
> diversity of the present system.
>
> 4) As surplus generation capacity winds down,
> the Department of Minerals and Energy will
> promote nuclear energy as an environmentally-
> friendly alternative.
>
>But critics pointed out contradictions within the four
>alleged accomplishments, which in turn suggest
>possibilities for dramatic reforms:
>
> 1) Eskom's electrification of low-income
> households is unsustainable, because the per-unit
> price is too high for low-income households.
> The price to consumers via pre-paid meters is in
> excess of R0,30 per kiloWatt hour, which has
> had the effect of reducing demand for electricity
> far below what Eskom anticipated. In turn,
> relatively high electricity prices--compared to
> disposable income--have led to a dramatic
> reduction in the speed and scope of rural
> electrification, and to an unprecedented
> campaign of electricity cut-offs both by Eskom
> and by its municipal government clients.
> The vast majority of Eskom's white
> customers are able to pay on the basis of a
> metered system, while the vast majority of
> Eskom's black clients must pay on the basis of
> a pre-paid meter, which gives Eskom a generous
> source of credit from low-income people.
> Electricity cut-offs are being handled in a
> most incompetent manner, and blatant
> inaccuracies and vastly overinflated estimates
> characterise the bills received by Soweto
> customers. In addition, Eskom customers in
> Soweto are paying higher per-unit prices (by a
> few cents) than are households in Sandton who
> are on a different tariff system also operated by
> Eskom. (The break-even point at which the
> Sandton tariff makes sense is roughly 500 kWh
> per month, and the average Sowetan household
> usage is 600 kWh per month, so more than half
> the Soweto households should be billed
> according to Sandton's tariff.) Sowetans who
> consume more than the average have not been
> informed by local Eskom staff about their ability
> to change tariffs so as to have the lower rates
> enjoyed by Eskom's Sandton residents.
> While the cross-subsidy from industry to
> households is acknowledged, it should be clear
> that it remains insufficient to assure that low-
> income people gain access to sufficient
> electricity. Worse, reports discussed in labour-
> government meetings suggest that a cost-plus
> pricing strategy that may be adopted as Eskom
> commercialises could raise the electricity costs
> to households by 20-50% (this was not denied
> by officials present).
> One important reason that the high prices and
> anticipated increases may be adopted by Eskom
> and the government is that the full set of
> benefits (positive externalities) associated with
> electricity access are not being factored in.
> (These include a net improvement in the
> environment, many fewer respiratory disease and
> other public health problems, fewer hazards
> associated with fire, greatly increased gender
> equity, improved productivity on the part of
> workers, improved capacity to learn on the part
> of youth, greater chances for class desegregation,
> and many economic spinoffs from those who can
> use electricity for income-generating purposes.)
>
> 2) While Eskom offers the cheapest electricity to
> industrial users in the world, this has several
> negative implications. Firstly, the cost of
> environmental damage associated with the
> extreme C02 emissions associated with coal-fired
> electricity generation is not taken into account in
> the pricing. The distortions caused, in the
> process of generating electricity for huge mega-
> consumers (Alusaf, Columbus, other Highveld
> projects, Saldanha, Mozal, etc) have been part of
> the case against South Africa in international
> trade, aid and investment projects (most recently
> in a threat to end further International Finance
> Corporation investment in the Mozal smelter
> complex). In addition, the environment is
> harmed by the increase in S02 and other
> emissions, which would not take place were it
> not for the excessively cheap electricity. (Part of
> the rationale for large consumption was the
> overcapacity experienced during the 1980s-90s
> due to the ill-considered excess construction of
> coal-fired and nuclear plants by Eskom.)
> Secondly, the benefits of the large industrial
> projects are elusive. There are typically fewer
> than 1 000 permanent jobs per mega-project.
> There are typically very few, if any, backward
> and forward linkages. And a large share of the
> hard currency acquired through exports of
> electricity-intensive products (aluminum,
> stainless steel, etc) is typically siphoned off to
> the site of ownership. In many cases, majority
> ownership in the mega-industrial projects is held
> by companies domiciled for investor purposes in
> Britain or Australia.
> If the mega-industrial users and the mining
> houses are consuming the vast bulk of the
> electricity in South Africa, then they are also
> driving up the long-run marginal cost of
> electricity, since when the current excess
> capacity runs out, much more expensive energy
> generation sources will have to be constructed.
>
> 3) Aside from conforming to international
> ideological trends associated with "neoliberal"
> electricity sector restructuring (which are widely
> recognised as contributing to extreme inequality
> and deprivations in state service provision in
> most countries), and aside from anticipated job
> losses invariably associated with market-driven
> parastatal commercialisation (which have
> sometimes dramatic social costs), there are
> objective consumer-related problems that can be
> identified with the electricity sector's
> restructuring. The institutional restructuring
> proposed by the officials will result in three
> negative developments. Firstly, permission will
> be granted for private firms to engage in
> generation of up to 30% of the national market,
> which will in turn lead to those firms cherry-
> picking the market so as to seek highest-profit
> large customers, hence reducing the scope for
> cross-subsidisation from industry to low-income
> consumers.
> Secondly, the establishment of six Regional
> Electricity Distributors (REDs) will excessively
> centralise electricity so as to disempower
> municipalities from using surplus revenues to
> subsidise other vital municipal services (e.g., fire
> protection, against regular household paraffin
> spills).
> Thirdly, although it may appear
> contradictory, the six REDS are insufficiently
> centralised to take advantage of national usage
> by mega-consumers, leading to a smaller pool
> from which to gain cross-subsidies for local low-
> income users. Given the extreme inequality
> between regions in South Africa, the difficulty
> of a national-local cross-subsidy due to regional
> REDs boundaries will make the electricity
> sector's developmental mandate much harder to
> achieve.
>
> 4) The use of nuclear energy--especially pebble-
> bed reactors--as an alternative is highly dubious,
> given decades of information about nuclear
> accidents and hazards, about waste disposal
> problems, and about the economic inefficiencies
> associated with nuclear power when such risks
> are factored in to the national insurance system
> as a whole. The amount of South African
> taxpayer money and Eskom surpluses spent on
> nuclear R&D is shocking, compared to the tiny
> amounts of money available for vitally-needed
> research on solar, wind, geothermal and other
> potential renewable sources.
>
>The officials generously replied to these arguments.
>Of greatest importance, perhaps, was the National
>Electricity Regulator's concession that so-called
>"cost-reflective" electricity pricing--which he is
>mandated by government to pursue--could be
>interpreted beyond mere financial inputs/outputs, to
>incorporate the many social, economic and
>environmental costs (and benefits) of electricity. The
>main policy-making official from government
>confirmed that the various positive benefits of
>electricity are highly valued. This would appear to
>give some scope for technical discussions.
> Yet it was pointed out that if this openness to
>broader cost-benefit analysis was serious, the
>following problems would not be so obvious in 21st
>century South Africa:
>
> 1) the overall price of electricity to low-income
> people would not be beyond their means;
>
> 2) cutoffs of electricity supply, including cables
> and including entire geographical areas, would
> not be happening (instead a lifeline supply
> would continue to be provided);
>
> 3) the practice of self-cutoff of electricity,
> through inadequate income to afford pre-paid
> cards, would not be so common;
>
> 4) the denial of electricity to thousands of
> schools and clinics would not be so common;
>
> 5) the rural electrification programme would not
> be slowing down, given the many millions of
> people still unserved;
>
> 6) the possibility of local-local electricity cross-
> subsidisation (from excessive consumers to those
> with basic-supply needs still unmet) would be
> firmly encouraged by the Regulator through
> mandatory implementation of progressive block
> tariffs (whereby accounts with high consumption
> per resident are charged higher marginal costs,
> as is common in the water sector);
>
> 7) the national-local cross-subsidy from industry
> to domestic consumers would be larger, and the
> high levels of subsidies (hundreds of millions of
> rands per year) for commercial farmers would be
> more critically examined to determine whether
> farmworkers share the benefits adequately;
>
> 8) officials at national level would not be tardy
> in implementing the free basic electricity supply
> to all South Africans promised by the African
> National Congress in election manifesto last
> October: "ANC-led local government will
> provide all residents with a free basic amount of
> water, electricity and other municipal services,
> so as to help the poor. Those who use more than
> the basic amounts will pay for the extra they
> use" (the tardiness by Eskom, for example, has
> been the basis for even Johannesburg refusing to
> provide the free basic amount to its own
> electricity customers);
>
> 9) the Regulator would not shy away from
> endorsing the key component of the ANC
> promise, namely "all residents," which implies
> that there may be means-testing rather than a
> dramatic restructuring of the consumption tariff
> along progressive block-tariff lines;
>
> 10) the unit of analysis in discussions about
> future implementation of the ANC free basic
> electricity promise would be an individual
> person, not a "household" (given that low-
> income families are often disproportionately
> large in number, especially given the impact of
> AIDS);
>
> 11) the cheap appliance strategy of Eskom
> would be made part of a broader industrial
> strategy to ensure that with some free electricity
> there will be a switch from use of wood/coal for
> cooking/heating to hotplates, stoves and geysers;
> and
>
> 12) a sufficiently large free supply--e.g., 1 kWh
> per *person* per day as suggested by Soweto
> leaders (instead of, e.g., Cape Town's 20 kWh
> per *household* per month)--would be offered
> to all South Africans as the "basic" amount, so
> as to ensure that the benefits of free electricity
> (public health, hazard abatement, environmental
> improvements, gender equity, desegregation,
> economic spin-offs) are genuinely within reach
> of low-income people.
>
>The Municipal Services Project is often asked, "If
>you are so critical, what is your alternative?!" The
>short-hand reply to this question, is "The RDP, the
>Bill of Rights of the Constitution, the Grootboom
>judgement, and the ANC Free Basic Electricity
>promise." The long-hand elaboration continues to be
>developed. But it is likely that some or all of the
>dozen points above would be part of whatever
>alternative strategy and programme emerges from
>progressive organisations in South African civil
>society.
>
>
>
>
>
-- James Heartfield