David Lipschitz comments on City of Cape Town Draft Budget 2012 - 13 Net Metering Tariff Proposals. Added 2012-04-11

Here is my comment on the Draft City of Cape Town Net Metering Tariffs for July 2012. Feel free to copy and send to idp@capetown.gov.za

To see the Tariffs, visit: http://www.capetown.gov.za/en/Budget/Pages/DraftBudget2012-2013.aspx and click on "Utility_Services_Electricity_Consumptive"

Dear IDP process:

Introduction:

The DA run City of Cape Town are doing what their cousins, the ANC government did in 2009. In 2009, the Government introduced a Feed In Tariff, but made it impossible to get. There was no Power Purchase Agreement (PPA); systems had to be bigger than 1 MW; and initially PV was not included!

In 2012, the City will follow in the Government's footsteps and introduce an impossible to implement Net Metering Tariff. A real pity as the only and major constraint to GDP growth is lack of electricity supply and I believe it is illegal for the government to have a stranglehold on this, via their monopolies Eskom and their Municipal Agents.

The SABS and NERSA have published the Embedded Energy policy documents which make Net Metering including Time of Use Tariffs a reality with only an endorsement from the Cities and Eskom.

Furthermore the only people who will benefit from "Net Metering" are homeowners using more than R4500 per month of electricity. So the government again introduces a law which benefits the rich at the expense of the poor and at the expense of the Renewable Energy industry and the thousands of jobs it will create and the millions of jobs that will be created by having a reliable, cheap and sustainable electricity supply.

Here are my detailed comments:

The proposed Tariff has a kWh portion and a Service Fee. The City of Cape Town say the Service Fee is to pay for the distribution lines to my house, maintenance etc. But the City will pay Eskom 63 cents on average for electricity and charge an average middle class homeowner R1.46. Prices include VAT. One would imagine that the reason for the increase in fee is for Value Added Services as is the case with most service providers, eg a retailer buys goods from a supplier and marks up the goods. The mark up is the value added.

A homeowner using Net Metering exports surplus electricity to the grid during the day and then imports the electricity needed at night. Over the course of a year, the total electricity price should be zero. But with the service fee the price over the year will be the service fee, ie R8,000.

Homeowners using 3,000 kWh per month or more can benefit from Net Metering! These homeowners should install a 20 KW renewable energy system, but if they install a 1 KW system, they will break even. The reason is that they will be paying R200 per month for the system, R664 per month Service Fee and a lower per kWh rate for their electricity of R1.16 instead of up to R1.57.

With Net Metering, the Grid becomes the "battery." If people using Net Metering knew that when there was load shedding they would still have electricity it would be worth it to pay the R664 service fee. Otherwise it isn't. And therefore the only people who will benefit from Net Metering, as usual, will be the rich.

Conclusion

For a country to be sustainable it must not only incentivise people to save energy but it must also allow these people to make their own electricity. Government is constraining the economy in the most dramatic fashion and exporting thousands of jobs to the Asian Tigers. Jobs that could be done in South Africa if only we had some visionary thinkers who realised that the only remaining constraint in a country with a rapidly growing workforce and a huge resource base, is lack of electricity supply.

Government will take a minimum of 10 years to supply the quantities of electricity needed, and in fact when one looks at the numbers, Kusile and Medupi only replace electricity that will be lost in the 2020's due to existing plants reaching end of life!

Only private capital can make electricity cheaper and faster than government can. Deregulate the electricity market today and see how fast the economy grows. Allow Net Metering with existing tariff structures, at the new July 2012 rate, and no Service Fee. Implement a locally produced electricity meter which has been designed locally at about a 1/5 of the cost of imported meters. Do it now and win the next election!!

Yours faithfully,
David Lipschitz