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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Purpose <str<strong>on</strong>g>of</str<strong>on</strong>g> this study<br />
2<br />
• For much <str<strong>on</strong>g>of</str<strong>on</strong>g> the past three decades, electricity prices in South Africa have been low and declining. But from 2008 the trend in<br />
prices took a dramatic turn when, in resp<strong>on</strong>se to serious power supply shortages, <strong>Eskom</strong> embarked <strong>on</strong> a massive build<br />
programme to increase power generati<strong>on</strong> capacity and between 2008 and 2011 real electricity prices rose by 78%.<br />
• This report was commissi<strong>on</strong>ed by <strong>Eskom</strong> as part <str<strong>on</strong>g>of</str<strong>on</strong>g> its preparati<strong>on</strong> for the third Multi-Year <str<strong>on</strong>g>Price</str<strong>on</strong>g> Determinati<strong>on</strong> (MYPD 3)<br />
process. Given the sharp increases in electricity prices in recent years and the need for further tariff increases, the overall<br />
objective <str<strong>on</strong>g>of</str<strong>on</strong>g> this study was to c<strong>on</strong>tribute towards an better understanding <str<strong>on</strong>g>of</str<strong>on</strong>g> the potential impact that further electricity price<br />
increases could have <strong>on</strong> the various sectors <str<strong>on</strong>g>of</str<strong>on</strong>g> the sectors <str<strong>on</strong>g>of</str<strong>on</strong>g> the ec<strong>on</strong>omy by c<strong>on</strong>solidating the findings <str<strong>on</strong>g>of</str<strong>on</strong>g> a number <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
existing studies and academic papers <strong>on</strong> the subject.<br />
• <str<strong>on</strong>g>The</str<strong>on</strong>g> report is structured around four chapters:<br />
Introducti<strong>on</strong><br />
Chapter <strong>on</strong>e gives some c<strong>on</strong>text to the broader analysis <str<strong>on</strong>g>of</str<strong>on</strong>g> the impact <str<strong>on</strong>g>of</str<strong>on</strong>g> rising electricity prices <strong>on</strong> different sectors <str<strong>on</strong>g>of</str<strong>on</strong>g> the<br />
ec<strong>on</strong>omy, by providing a brief overview <str<strong>on</strong>g>of</str<strong>on</strong>g> the current structure <str<strong>on</strong>g>of</str<strong>on</strong>g> the South African ec<strong>on</strong>omy and the trend in and drivers <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
electricity c<strong>on</strong>sumpti<strong>on</strong>.<br />
Chapter two <str<strong>on</strong>g>of</str<strong>on</strong>g>fers an assessment <str<strong>on</strong>g>of</str<strong>on</strong>g> the vulnerability <str<strong>on</strong>g>of</str<strong>on</strong>g> different sectors <str<strong>on</strong>g>of</str<strong>on</strong>g> the South African ec<strong>on</strong>omy to rising electricity<br />
prices.<br />
Chapter three c<strong>on</strong>siders the findings <str<strong>on</strong>g>of</str<strong>on</strong>g> studies <strong>on</strong> the impact <str<strong>on</strong>g>of</str<strong>on</strong>g> rising electricity prices <strong>on</strong> sector output, employment and<br />
pr<str<strong>on</strong>g>of</str<strong>on</strong>g>itability.<br />
In Chapter four we explore the policy opti<strong>on</strong>s available to government in the c<strong>on</strong>text <str<strong>on</strong>g>of</str<strong>on</strong>g> increasing electricity prices and the<br />
case for industry support.<br />
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