Eskom’s ‘death spiral’ under the microscope

A major topic of discussion during recent public hearings into Eskom’s 2018/19 revenue application, was whether a further double-digit tariff hike could trigger a “utility death spiral”, whereby rising tariffs and utility costs spark an exodus of energy-intensive customers from the network, leaving the remaining customers with ever escalating power bills. The Energy Intensive Users Group (EIUG), representing Eskom’s 32 largest mining and industrial customers, which collectively consume 40% of the country’s electrical energy, was particularly vociferous in its warnings. However, Business Unity South Africa also highlighted the threat, noting that Eskom’s combined sales to industy and mining were already 14% below 2011 levels. If granted, Eskom’s revenue application “would trigger further defections from the grid,” the business body cautioned.