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Socialist Project • E-Bulletin No. 1220
February 12, 2016

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NUMSA and Allies Call for Dismantling
the ‘Mineral Energy Complex’ in South Africa

Electricity Crisis Conference Declaration

We, as representatives of trade unions that organize in the energy sector and delegates from communities that are struggling around outages, loadshedding, high electricity prices and poor quality of energy services, met for four days (June 2nd to 5th, 2015) in the midst of what we consider as a far-reaching electricity crisis in our country. As we met, on the table of the National Energy Regulator of South Africa (Nersa) is an application by South Africa's electricity utility – Eskom – for a 25.3% increase in the price of electricity for the year 2015/16 to 2017/18. As we met, Nersa had agreed to grant municipalities an above-inflation increase of 12.2% from July 1st, 2015 and that nine municipalities were applying for average increases above the Nersa increase guideline of 12.2%. We also gathered when delegates at this conference from two municipalities were unsure whether they will reach their homes at the end of our deliberations still with some power, as Eskom threatened to plunge into darkness their defaulting municipalities today.

A Winter With No Power?

The electricity crises that face us worsen with each day that passes. The crisis is multipronged. It is a supply crisis and chronic load-shedding. What we see is a financial meltdown of Eskom; massive cost and time overruns in the build programme of new power plants such as Medupi and Kusile; and a worsening governance practices within Eskom as executives come and go, leaving with millions of rands as golden handshakes. We have also seen the downgrading of Eskom within capital markets and a ballooning debt for the utility as municipalities fail to pay their bills to Eskom.

As delegates to this Electricity Crisis Conference, we are enthused that our people are refusing to shoulder the implications and consequences of the crises. Throughout the four days, we heard of gallant battles against unaffordable electricity increases and imposition of prepaid meters that are being waged in different communities who refuse to have the burden of the electricity crises shifted onto them. At the forefront of these battles are women who unfortunately still bear the brunt of reproductive activities in our society. Our people realise that the electricity crises directly affects their children's ability to learn and to be taught as schools are cut off. Our people realise that as most of their staple diets are electricity intensive, tariff hikes increase food hunger in South Africa. They know that an increase in the price of electricity will lead to retrenchments and short-time for workers.

Electricity Crisis Calls for a Judicial Commission of Enquiry.

Conference is in full agreement that the electricity sector is a very sick sector. Financially, between now and 2018, Eskom has a R200-billion budget shortfall. The country's distribution grid infrastructure has maintenance and refurbishment backlog of between R35 and R50-billion. Eskom's energy availability factor has dropped from 82% to about 74%. Lack of proper maintenance and the age of existing fleet, has led to an increase in unplanned breakdowns of Eskom power stations. But more serious is the coal shortfall. A recently released Eskom Corporate Plan for 2015/16 to 2019/20 acknowledges that the current mining of coal will not meet the growing demand. Although in 2009 there was talk of opening up to 40 new collieries to supply Eskom, the electricity utility will face a 17-million tonne coal shortfall by 2017 at its coal-fired power plants. The shortfall is anticipated in 2015 at the Matla, Tutuka and Hendrina power stations and in 2016 at the Kriel and Arnot Power Stations. The price of coal is a very large input cost in electricity generation, costing around R50-billion a year.

The delays in delivering on the new build programme such as Medupi and Kusile is a further sign of how sick South Africa's electricity supply industry is. The whole new build programme has been characterized by cost and time overruns. While the Medupi tender came in, it was R32-billion. It was ratified by the Eskom Board at R91-billion. Presently cost escalations are reported to be about R300-billion and the power station that was meant to come on stream in 2011 is four years late. The costs for Kusile are unknown.

Conference believes that a judicial commission of enquiry is required to investigate these delays and cost overruns. The commission must also investigate contracts and tenders that Eskom management has entered into with contractors; senior management packages and remuneration; the voluntary retirement packages; and the relationship between consultants and Eskom employees. Forming part of the terms of reference of the judicial commission enquiry must be the conditions and impact of loans that Eskom receives from capital markets.

The Eskom crisis affects the whole country. It needs a full judicial enquiry with powers to subpoena people and force them to appear. Something based on voluntary appearances only is not strong enough.

The electricity crisis calls for a transition to a low-carbon economy and the dismantling of the Minerals-Energy Complex

The inevitability of loadshedding as Eskom plans to shut off several power stations for general maintenance as well as the utility's curtailment and loadshedding programmes have clearly focused minds on the nature of energy futures that we seek and the role of Eskom in such scenarios. South Africa's economy historically has been dependent on coal and other fossil-fuels. It also has been dependent on minerals and other energy intensive sectors. Energy was produced to feed these sectors. The electricity crisis poses the opportunity to mitigate against global warming and move away from fossil fuel to renewable energy.

We need a fundamental just transition – which is a plan for how we move away from an electricity system based on coal-generated plants to a more sustainable electricity system which relies on renewable energy. The effects of coal on the health of our communities and our environment are incalculable. It is time for a fundamental transition to an ecologically sustainable.

The renewable energy sector that we are demanding must be socially-owned; meaning a mix of publicly-owned energy entities, energy co-operatives, community-owned enterprises and municipal-owned energy entities.

Conference proposes the exploration of setting up a publicly-owned renewable energy utility, separate from Eskom. Eskom must not be granted exemptions from air quality standards set by the Department of Environmental Affairs.

The electricity crisis calls for de-corporatization of Eskom and putting the Electricity utility under real public control

Since the corporatization of Eskom, the country's electricity utility acts as a private company despite being a state-owned entity. De-corporatization is required, such that Eskom is not market-driven or required to generate profits. De-corporatization should include repealing parts of the Eskom Conversion Act of 2001 and that the board of directors is replaced by National Electricity Council including stakeholders such as customers, communities and workers.

We also need a different vision of Eskom. We need an Eskom people-centred planning, public participation, public ethos, financial and environmental sustainable practices, solidarity between providers and users; coordination between different services; decent jobs; quality of the workplace; transparency; accountability; good quality of service and commitment to renewable energy and eco-friendly energy.

We need to mobilize and educate society around our vision of a transformed Eskom and why a transformed Eskom is necessary.

The brunt of loadshedding must not be borne by
the working class and ordinary people

Load shedding reflects discrimination and shows lack of genuine forward planning. It has a particularly heavy impact on women (especially those in women headed households) because they are traditionally responsible for household care and spend the bulk of their income on energy.

Another important thing that we will have to do is the mapping of both the impacts on loadshedding for different classes, sectors and geographical locations, as well as the mapping of where electricity related struggles are occurring. It will be important to develop solutions that avoid conflict within the working class, especially between communities struggling over electricity pricing, metering and disconnections, and Eskom workers themselves. We aim to build a worker-community alliance that is made up of, and able to speak to, victims of pollution, to people with little or no access to electricity, to communities who are not currently heard.

In the short term we demand:

  • The democratization of the process of making decisions about load-shedding. Community reps and worker reps must be involved when decisions are made about how and when and where loadshedding happens.
  • Exemption essential public services like hospitals, clinics, commuter rail, schools, mortuaries etc from load-shedding.
  • The historical beneficiaries of electricity, and the big consumers of electricity should face a higher burden of load-shedding than the working class.
  • No workers wages or working conditions should be affected by loadshedding.

Load shedding is an opportunity to raise awareness about the bigger electricity problems that exist and interventions that need to be made.

Conference says No to privatization and the Nuclear Procurement!

Privatization or selling off pieces of Eskom is not acceptable; the utility must be publicly owned and be managed to serve the public interest. We reject the cutting-off of municipalities as a way of collecting debt from municipalities.

We also believe that the pursuit of nuclear procurement is a distraction from and a barrier to addressing the electricity crisis.

50kWh of Free Basic Electricity have proved inadequate for most households

Although there has been massive connections in the early 1990s, between 10% and 15% of households are still not connected. The Free Basic Electricity (FBE) that is presently is provided is inadequate and fragmented. A big concern is the fragmented nature of the FBE, which is 50KWh in some places and 100 KWh in others. Actually, to increase FBE to 200 KWh would not require much extra electricity, just 17% of Medupi's capacity. This can become a big issue in the run up to the 2016 local elections.

Conference agrees that possibilities exist for making FBE go further than it currently goes, through substantially reducing household electricity demand through a massive, rapid, and high quality, roll-out of Solar Water Heaters in working class and poor communities.

Conference agrees that the FBE must be increased and standardized and this be put to local governments before the 2016 local government elections.

Financing Eskom:

There are a number of cost drivers that have contributed to the present crisis in Eskom. They are:

  • the rising primary energy costs associated with coal, diesel and water
  • high executive pay and costs of consultants
  • corruption throughout the value chain of Eskom, especially costs overruns in the construction of power stations.

There is also a lack of information from Eskom and the major coal producers on what is causing the rise in costs. Conference agrees that:

  • Government should subsidise Eskom.
  • Reject solutions that end up with communities/organizations fighting with each other.

In the short-term and as emergency measures:

  • Reduce costs of primary energy costs such as controlling the cost of coal. This requires greater control over price of coal and therefore control over the price of suppliers.
  • Pass emergency regulations/legislation declaring coal a strategic mineral.
  • Prescribed assets: banks and other financial institutions are to invest 10%-15% of lending and investments into infrastructure projects, including Eskom.
  • The issue of coal mining licenses must immediately be revisited to ensure security of supply and fixed price mechanism.
  • Eskom shouldn't have to pay dividends and taxes.

Programme of Action:

  • We need to build a broad coalition around the electricity crisis
  • We must join hands of workers and communities around electricity and energy struggles
  • We need to draw in people and organizations working on energy, environment and climate change into this broad coalition.
  • To further the above, we need to embark on protest action, litigation, mobilization and education.
  • We need to prioritize building support for communities engaged in electricity struggles; unite and strengthen these struggles -particularly in communities where above average guideline increases are being proposed.

In practical terms:

1. Tariffs:

  • We call for a moratorium on the disconnection of municipalities by Eskom for non-payment.
  • As the campaign and as individual organizations need to make submissions on the electricity Increase by 15 June.
  • Picket outside Nersa and fill the hall when hearings are held on 23 or 24 June 2015 when Eskom's selective reopener of Multi-Year Price Determination 3 (MYPD3)
  • Find a way of co-ordinating communities the 9 municipalities that are applying for above guideline 12.20%; namely:
    • Abaqulusi Local Municipality (15.00%)
    • Cape Agulhas Local Municipality (14.92%)
    • City of Umhlathuze Local Municipality (14.24%)
    • Drakenstein Local municipality (12.69%)
    • Endumeni Local Municipality (16.12%)
    • Gariep Local Municipality (17.00%)
    • Midvaal Local Municipality (14.24%)
    • Mookgopong Local Municipality (35.00%)
    • Msukaligwa Local Municipality (13.67%)

The public hearings on these municipalities are on 19 June. Communities must say what they think of their municipalities’ application and support them in their actions against proposed increases. Members of the public who wish to attend these hearings must submit their requests on Tuesday 16 June.

2. Engaging with government, ESKOM and NERSA – come clean!

  • We need Eskom, government and Nersa to come clean and give us the full facts on the crisis!
  • We demand a meeting with War Room to make presentation on our way forward.
  • We call for a meeting with Eskom to make presentation on our way forward.

3. Representation on NERSA and in the war room.

NERSA and the War Room are taking decisions that fundamentally affect the lives of ordinary people, communities and workers, but we are not part of these decision making processes.

  • We want representatives to sit in War Room.
  • We want a representative Nersa.

4. Solidarity and action to back our demands.

Unless our demands are met, the following forms of a action will be considered:

  • all on unions to consider a protected socio-economic as envisaged in Section 77 of the Labour Relations Act (LRA)
  • show solidarity for communities and workers struggling around electricity issues by embarking on evening vigils and other actions like pickets, marches and other forms of protests.
  • call on business and industry not to deduct wages from any workers who are not able to work because of load shedding.
  • act in solidarity with workers who are not paid as a result of load shedding

5. Developing our vision for the electricity sector:

  • We plan to set up a “peace room” where we draw on research and information to develop our own plan for the electricity sector that meets the needs of people. Research needed will include:
    • measures to curtail the price of coal.
    • renewable energy to be urgently fed into grid as a solution.
  • We will support campaigns against the planned nuclear procurement plan. We do not believe that nuclear energy is the answer.

6. Who takes this forward?

  • We agree to set up an ELECTRICITY CRISIS CAMPAIGN (ECC)
  • Conference elected an Interim Civil Society Steering Committee made up of one representative from each national organization with mass base membership present at the Conference and representative from each of the provinces present.


Four Reasons Why Clean Energy
Must Be Public Energy

Archie Davies

Across Europe and beyond, municipalities are stepping in to challenge the stranglehold of energy companies over energy supply. It seemed London was going to be following these innovative models when it announced in 2013 that it would pursue a ‘Licence Lite’ approach, allowing the city to connect public and small-scale energy generation with large consumers such as Transport for London. While not going far enough, this seemed to be good news.

Clean Affordable Ennergy. For People, Not For Profit

It comes as a massive disappointment, then, to learn that the Greater London Authority (GLA) is inviting the wolf in to tea by signing a deal with one of the same companies which has so spectacularly failed to deliver the affordable, clean energy London needs. Rather than using Licence Lite to challenge the oligopoly, the GLA has asked German-owned utility giant RWE npower to run the programme itself.

A new campaign – Switched On London – has been launched in London to follow the lead of cities like Hamburg in demanding a publicly owned municipal energy company. Here are four reasons clean energy needs to be public:

1. We don't have any more time to waste.

The deal which has emerged from Paris is long on fine words and drastically short on detailed plans for implementation. From Cumbria to Chennai and the Balkans the impacts of climate change are becoming ever more present in people's daily lives. Meanwhile, for the last 30 years the world has experimented with a private-sector led response to climate change – a trend reproduced by the Paris deal.

But this has resoundingly failed: bills have spiralled, consumer satisfaction has plummeted, investment in new clean infrastructure has stalled, and power has become increasingly centralized in the hands of a small cartel of monolithic multinationals. Fossil fuel companies won't jump; they have to be pushed. Global temperatures have already risen by around one degree, so we don't have another 30 years to waste waiting for them to solve our energy and climate problems.

The solution is achievable; in Nottingham and Bristol city councils have established a public energy supply company. In Denmark and Germany community and public energy is leading the transition to renewables.

2. Energy provision should be about social justice.

In London a million people live in fuel poverty. Stagnating wages, rising rents and eviscerated welfare forces people to choose between heating and cooking. In the meantime, the profits of the Big Six have increased ten fold since 2007.

It doesn't need to be that way. Progressive-pricing mechanisms can help the worst-off with their bills. Public energy could put an end to forced electricity cut-offs and invest in the ambitious energy efficiency measures needed to reduce bills and keep homes warm. Freed from the need to accrue grossly inflated profits, municipally-owned companies can supply and deliver energy according to principles of social justice that the Big Six would never dream of.

3. We need clean energy in our cities.

London is miles behind other cities. In Munich, the municipally-owned public utility has begun to deliver on the city's commitment to 100% clean energy supply by 2025 while in the UK, London, Birmingham and Leeds are all serial failures at improving their air quality: in the capital, air pollution kills around 10,000 people a year. Cities around the world are choking their inhabitants through continued addiction to fossil fuel-based transport and energy systems. This leads to profound environmental injustice: pollution is concentrated in poorer urban areas inhabited mainly by working class communities and people of colour.

Municipally-owned energy companies can drive public investment into renewable energy, and maximise local green energy capacity such as solar and district heating. Divesting public pension funds from fossil fuels would release a flow of money to invest in new renewable energy capacity, and the public sector can sponsor municipal bonds – as have been issued for Crossrail for the desperately needed transition to new energy and transport systems.

4. We need a democratic energy system.

Energy isn't a luxury, it's a necessity. Yet it is controlled by an elite few, with companies operating in perennially suspicious ways, drawing the gaze of competition regulators and their own watchdogs. Fossil fuel companies don't function in truly competitive markets; on the contrary they are bolstered by generous state subsidies while retaining power deep within corporate bureaucracies.

The energy system should be radically democratized. In Berlin, a campaign to re-municipalize the energy system was overwhelmingly popular. Over 600,000 people voted in favour of the proposal; more than 80% of those voting. The campaign failed only because a blocking coalition of the energy company Vattenfall and the city senate moved the date of the referendum. Consequently, the campaign fell just 21,000 votes short of the requisite threshold of 25% of city residents.

Public ownership can deliver radical transparency and accountability. Berliner Energietisch (Berlin Energy Roundtable) campaigned for new and democratic structures of participation. It demanded a municipal company answerable to advisory assemblies held across the city able to drive the company's agenda through public petitions.

Following this lead and the success of energy democracy movements across Europe and beyond, Switched On London – a broad coalition of grassroots organizations, unions and environmental groups – is demanding a truly democratic energy system for the capital. With London Mayoral candidates vying to outdo each other on environmental issues, we'll be building a grassroots movement in the run up to the 2016 mayoral elections to demand a people's alternative to the Big Six.

There are nothing but tired ideological tropes and ingrained vested interests stopping cities from stepping in to secure clean, democratic and socially just energy systems. It's time to take our power back. •

Archie Davies is a Ph.D. geography researcher at King's College London. This article initially appeared on Novara Media website.


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