June 20, 2006
Introduction
This memo documents the written submission of Solidarity in support of the
viability of the National RED / 7th RED
Solidarity supports the Restructuring Objectives
Solidarity confirms its support for the overriding objectives of the
restructuring process - as initially recorded in the 1998 White Paper and
reaffirmed in the Blueprint of 2001 authored by the Department of Minerals and
Energy.
The key objectives and our comments are as follows:
1. To provide low equitable electricity tariffs to all consumers.
We support a structure for the electricity industry that will ensure low
equitable tariffs - which we associate with economies of scale, special
attention to the needs of smaller towns and rural areas, maximum use of
existing infrastructure, and support for existing proven capacity in Eskom.
2. To provide quality supply and service to all customers, in support of the
government's economic and social development plans.
We especially note the importance of supporting economic growth and social
development - and we note the differing aspects of these issues between metros and
the smaller towns and rural areas.
3. To meet the country's electrification and free basic electricity targets.
We support a structure that gives emphasis to the very different issues of
rural and metro electrification.
4. To meet the legitimate employment, economic and social interests of all
employees in the sector, and ensure their safety.
We support a structure that provides employment security and career opportunity
to all industry employees - and we note the key issues of employment security
and career opportunity in smaller towns and rural areas, which have very
different issues to those of the metro areas. We require an industry structure
that will focus on the economic needs of non-metro areas - with support for
employment and social stability in these areas.
5. To operate in a financially sound and efficient manner, in order to provide
a reliable and sustainable future for both consumers and employees
We note that the industry is clearly viable as a public sector essential
service. Ultimately industry and domestic customers will pay the required
price, subject to support for the poorest citizens. Cross-subsidies between
consumers will assure the viability of the 6 metro REDs and separately the
National RED as solutions to South Africa's metro and non-metro challenges.
Solidarity supports Economic Development throughout South Africa
Solidarity notes that many of the key economic issues in South Africa today are
represented in the split between economic and social development in metro vs.
rural areas (including smaller towns). It is clear that the structure of the
electricity industry must be aligned to the very different requirements of
large urban and smaller urban/rural communities.
Solidarity has more confidence in a separation of responsibilities
between metro REDs addressing the needs of metro areas, and non-metro National
RED with national support to address the needs of smaller towns and rural
areas.
Solidarity supports employment security and career opportunity for industry
employees throughout South Africa
Solidarity notes that the issues of employment security and career
opportunity especially affect the workforce of smaller towns. Economic
development and opportunity in rural areas is continually threatened by
migration of skills to the big cities. Solidarity assumes that the 6 metro REDs
will provide the support required in large urban areas, and we support a
National RED especially aligned to the needs of staff and employment in the
smaller towns and rural areas.
Solidarity believes the industry is viable
It is clear that the industry is viable. There are, today, significant areas of
cross subsidy between industry and domestic, between urban and rural, and
between all customers and electrification customers. These subsidies must
continue for national equitable tariffs. We have confidence that the National
RED is viable given that its customers have unique economic and social needs,
which must be supported by the entire South African industry.
Conclusion
Our overall conclusion is as follows:
AC van Wyk: Lega.l representative (082 576 1230)
Jaco Kleynhans: Head: Communication (083 324 5631)