The Economic Impact of Electricity Price Increases on ... - Eskom

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Contents 14 Purpose <strong>of</strong> the study Executive Summary Analysis and Findings Chapter 1 – <strong>The</strong> structure <strong>of</strong> the South African economy & trend in electricity consumption Chapter 2 – <strong>The</strong> vulnerability <strong>of</strong> sectors <strong>of</strong> the SA economy to rising electricity costs Chapter 3 – <strong>The</strong> <strong>Impact</strong> <strong>of</strong> electricity price increases Chapter 4 – Exploring policy options available and the case for industry support ©2012 Deloitte Touche Tohmatsu Limited. All rights reserved.
An industry’s vulnerability to rising electricity prices depends, most obviously, on its reliance on electricity as an input to production but also on the extent to which it is able to mitigate against the impact <strong>of</strong> rising electricity prices Reliance on electricity as an input <strong>The</strong> first group <strong>of</strong> criteria are indicators <strong>of</strong> the firm\industry’s reliance on electricity as a factor input • Direct electricity costs as a proportion <strong>of</strong> total inputs costs • <strong>Electricity</strong> intensity (i.e. electricity consumption per unit <strong>of</strong> output) • Direct and indirect electricity costs as a proportion <strong>of</strong> total inputs costs 15 Vulnerability Criteria Vulnerability <strong>of</strong> sectors to rising electricity prices Ability to mitigate against rising prices <strong>The</strong> second group <strong>of</strong> criteria are indicators <strong>of</strong> the extent to which a firm\industry is able to adapt to rising prices and mitigate against the negative impact on its pr<strong>of</strong>itability • Ability to pass on the cost (i.e. pricing power and price elasticity <strong>of</strong> demand) • Scope for electricity efficiency gains • Potential to substitute electricity with cheaper energy sources ©2012 Deloitte Touche Tohmatsu Limited. All rights reserved. 2
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Page 3 and 4: Contents 3 Purpose of</stro
Page 5 and 6: The extent to whic
Page 7 and 8: Growth in electricity consumption f
Page 9 and 10: At a microeconomic level the two ma
Page 11 and 12: Economic growth is
Page 13: In 2006 South Africa had the lowest
Page 17 and 18: % Share of electri
Page 19 and 20: Electricity intens
Page 21 and 22: A comparison of th
Page 23 and 24: Electricity costs
Page 25 and 26: about the vulnerability of<
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Page 29 and 30: Contents 29 Purpose of</str
Page 31 and 32: As part of broader
Page 33 and 34: % chnage in real electricity prices
Page 35 and 36: Contents 35 Purpose of</str
Page 37 and 38: However each of th
Page 39 and 40: The argument that
Page 41 and 42: There are however
Page 43 and 44: Funding subsidies through budget pr
Page 45 and 46: A sudden adjustment to ‘cost-refl
Page 47 and 48: Improved incentives for energy-effi

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