The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
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An industry’s vulnerability to rising electricity prices depends, most<br />
obviously, <strong>on</strong> its reliance <strong>on</strong> electricity as an input to producti<strong>on</strong> but<br />
also <strong>on</strong> the extent to which it is able to mitigate against the impact <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
rising electricity prices<br />
Reliance <strong>on</strong> electricity as an input<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g> first group <str<strong>on</strong>g>of</str<strong>on</strong>g> criteria are indicators <str<strong>on</strong>g>of</str<strong>on</strong>g> the<br />
firm\industry’s reliance <strong>on</strong> electricity as a factor input<br />
• Direct electricity costs as a proporti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> total inputs<br />
costs<br />
• <str<strong>on</strong>g>Electricity</str<strong>on</strong>g> intensity (i.e. electricity c<strong>on</strong>sumpti<strong>on</strong> per unit<br />
<str<strong>on</strong>g>of</str<strong>on</strong>g> output)<br />
• Direct and indirect electricity costs as a proporti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
total inputs costs<br />
15<br />
Vulnerability Criteria<br />
Vulnerability <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
sectors to rising<br />
electricity prices<br />
Ability to mitigate against rising prices<br />
<str<strong>on</strong>g>The</str<strong>on</strong>g> sec<strong>on</strong>d group <str<strong>on</strong>g>of</str<strong>on</strong>g> criteria are indicators <str<strong>on</strong>g>of</str<strong>on</strong>g> the extent to<br />
which a firm\industry is able to adapt to rising prices and<br />
mitigate against the negative impact <strong>on</strong> its pr<str<strong>on</strong>g>of</str<strong>on</strong>g>itability<br />
• Ability to pass <strong>on</strong> the cost (i.e. pricing power and price<br />
elasticity <str<strong>on</strong>g>of</str<strong>on</strong>g> demand)<br />
• Scope for electricity efficiency gains<br />
• Potential to substitute electricity with cheaper energy<br />
sources<br />
©2012 Deloitte Touche Tohmatsu Limited. All rights reserved.<br />
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