Manufacturers bid for cheaper power

Business Day Live 16 November 2012.

MANUFACTURERS say they are making progress in their talks with the government about the possibility of electricity subsidies.

Following Eskom’s admission last month that BHP Billiton paid lower rates for electricity than domestic users because of a special deal, manufacturers have been clamouring for similar discounts. Eskom has applied to the National Energy Regulator of SA for tariffs to increase 16% a year over the next five years…

(Editor’s note: I really don’t think that extending electricity subsidies to businesses, in addition to the BHP Billiton subsidies that everyone complains about is the right way to go. Cheap electricity will just perpetuate market distortions and encourage inefficient use of energy. Rather have true, cost-reflective tariffs and encourage businesses in a more constructive way, such as bigger tax concessions on energy efficiency improvements, or a simple reduction in corporate tax. I’m the economists will be full of good ideas. But lets not repeat the BHP Billiton mistakes.)

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