Eskom: How consumers are milked

March 23, 2013
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Eskom sells 9% of its electricity to BHP Billiton’s two aluminium smelters at less than one-fifth of the tariff paid by other consumers, Beeld reported on Friday.

The preferential tariffs for the two smelters, Hillside in Richards Bay and Mozal in Maputo, enable the two loss-making smelters to be sustained while the rest of the country’s consumers, both household and industrial, pay much higher electricity prices.

Details of the deal emerged from contracts Eskom revealed to Media24 in terms of a court order ratified by the Supreme Court of Appeal last week. BHP Billiton appealed against the original court order, but the appeal was rejected.

At Hillside, Billiton pays for two-thirds of the 1200 megawatts the smelter uses in accordance with a secret formula agreed upon as far back as 1992 and which applies until 2028.

Hillside is paying 22.65 cents per kilowatt hour (kWh) to Eskom this month, and households average of R1.40 per kWh.

It costs Eskom 41 cents per kWh to generate electricity.

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