On the Real Exchange Rate Effects of Higher Electricity Prices in South Africa



Table 5:

Year

Eskom average price increase (%)

Inflation rate (%)

1987

12.00

16.20

1988

10.00

12.90

1989

10.00

14.50

1990

14.00

14.30

1991

8.00

15.60

1992

9.00

13.70

1993

8.00

9.90

1994

7.00

8.80

1995

4.00

8.70

1996

4.00

7.30

1997

5.00

8.60

1998

5.00

6.90

1999

4.50

5.20

2000

5.50

5.40

2001

5.20

5.70

2002

6.20

9.20

2003

8.43

5.80

2004

2.50

1.40

2005

4.10

3.42

2006

5.10

4.70

2007

5.90

7.10

(projected)

Source: Eskom yearbook (various editions); StatsSA (various editions).

Table 6:

Comparison between a tax on electricity and an increase in its administered price -
percentage changes

f0wn

f0wr

f0xn

f0xr

p1wn

p1wr

p1xn

p1xr

CONS

-0.312

-0.312

0

0

-0.492

-0.504

0

0

INV

0

0

0

0

0

0

0

0

GOV

0

0

0

0

0

0

0

0

EXP

-0.098

-0.096

-0.482

-0.818

-0.239

-0.169

-0.808

-1.26

IMP

-0.186

-0.186

-0.035

-0.06

-0.291

-0.293

-0.051

-0.084

GDP

-0.177

-0.177

-0.11

-0.186

-0.3

-0.29

-0.186

-0.289

CPI

-0.001

-0.002

0.24

0.34

-0.032

-0.057

0.334

0.469

PINV

-0.006

-0.006

0.059

0.167

-0.008

-0.028

0.091

0.238

PGOV

0.004

0.002

0.03

0.319

0.002

-0.047

0.042

0.44

PEXP

0.02

0.019

0.097

0.164

0.048

0.034

0.162

0.254

PIMP

0

0

0

0

0

0

0

0

PGDP

0.012

0.011

0.194

0.352

-0.029

-0.062

0.248

0.464

EMPL

-0.31

-0.31

-0.208

-0.351

-0.52

-0.5

-0.344

-0.537

Comparison of the average Eskom price increase to consumer inflation, 1987-2007


Note: “f0”: industries and households pay a 10% tax on electricity; “p1”: prices are directly
increased by 10%; “w”: nominal household spending is a function of wage income; “x”:
real household spending is constant; “n”: nominal wages are held fixed; “r”: real wages
are held fixed.

12



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