7/05/2008

Avoiding blackouts

South Africa puts up the price of power

Power generator Eskom has been given the go-ahead to increase prices by 27.5% in 2008/09, adding to inflationary pressures. However, many users would prefer guaranteed but expensive power to cheap but unpredictable supplies.

On July 1st Statistics South Africa announced plans to reduce the weighting of food in the consumer price index, to reflect changes in national spending patterns over the past five years. The change could lead to a moderation in the South African inflation rate, since food prices are currently rising faster than prices as a whole. However, food is certainly not the only component driving inflation higher--energy prices are also a major factor. This is partly, but not solely, due to the strength of international oil prices: domestic electricity prices have also been pushing up prices, and look set to continue to do so, since the National Electricity Regulatory of South Africa (NERSA) has ruled that state power generator Eskom can increase electricity tariffs by 27.5% in 2008/09 (starting April 1st). Although this is significantly less than the 50-60% rise sought by Eskom, and includes the 14.2% increase already approved for 2008/09, it will still be a burden for hard-pressed consumers. NERSA also gave provisional approval for 20-25% annual price rises over the next three years. This reflects the sharp rise in operating costs, especially purchases of coal and diesel, and the greater-than-expected use of expensive peak-load capacity because of shortages in base-load capacity. ...



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[Source: Breaking News from WarOnYou.com - Posted by Mint Dollar- The Federal Reserves Worst NightMare]

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