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NUMSA and United Front Joint Memorandum on the Eskom tariff increase

By Irvin Jim, Trevor Ngwane, and Lindiwe Malindi - NUMSA, December 1, 2017

The National Union of Metal Workers (NUMSA) and the UNITED FRONT (UF) are extremely dismayed by the opportunistic call made by the Eskom board and its management to increase the electricity tariff by 19.9%. We view this demand by Eskom as nothing more than a gross abuse of power, and an attempt by the State Owned Entity (SOE) to hold the entire country and the economy hostage. This is being done by an entity which has been moving from one scandal to another with absolutely no leadership. In fact, it is extremely shocking that in a period of just two years, Eskom has changed CEO’s three times, and its CFO, Anoj Singh, has been suspended under a cloud of corruption and mismanagement allegations. But the same company and its board have the audacity to make an outrageous demand for a 19.9% tariff increase. They have no regard for the catastrophic implications which will trigger a national crisis of plant closures of small, medium and large companies; as well as causing retrenchments in all big companies. It will in fact destroy all opportunities to stimulate real economic growth and jobs.

Socio-Economic Situation

NUMSA and the UF are of the view that the economy has been in a technical recession for several months which means the working class of this country are facing a job-loss blood bath across all sectors. Currently more than 36% of the working population is unemployed, and the numbers are increasing. More than 30.4 million of the population lives in abject poverty; the average worker supports at least 5 dependents on his/her meagre income, and at least 26 million South Africans go to bed hungry. Any change in the price of electricity will compound all these problems and increase the chances of a violent explosion in the country.

It is against this backdrop that NUMSA and the United Front reject Eskom’s outrageous demand for a 19.9% tariff increase. The Eskom board are clearly completely deaf and blind to the suffering of the working class because they decided to make this proposal in spite of the fact that there is glaring evidence that the working class majority simply cannot afford an increase in the electricity rate. The United Front and NUMSA have decided to hold this demonstration to express our anger with Eskom for wanting to increase the suffering of the working class, by requesting a tariff increase.

NUMSA’s Submission to NERSA on Eskom’s Application for a tariff increase

By Irvin Jim - NUMSA, November 15, 2017

NUMSA is a manufacturing union and since 2009, the union has witnessed the deep global crisis of capitalism in the manufacturing sector. NUMSA has witnessed hemorrhaging of jobs, plant closures retrenchments the downward variation of conditions and benefits of workers and the casualization of labour. At the centre of this crisis, especially in small, medium-sized companies has been the uncompetitive Eskom electricity tariffs.

The history of job losses can be traced to wrong the ANC government neo-liberal policies such as liberalization of trade, removal of exchange controls, continuous and the maintenance of high interest rates by the Reserve Bank. This situation was worsened the day government made the decision to move Eskom away from its core mandate which was to supply cheap electricity to the economy in order to grow the economy, to electrify communities and to create jobs. This mandate was replaced by a backward government and NERSA with the decision to prioritize their balance sheet, which was nothing more than to chase profits.

NUMSA has consistently called for the nationalization of all commanding heights of the economy and all our minerals. In the case of Eskom, we have consistently made a call that government must nationalize the strategic coal mines that must supply the national grid with cheap quality coal, so that we can escape the continuous exorbitant prices of primary coal, and deliver a competitive electricity tariff. If one were to look at the exorbitant primary coal tariff increases from 2007 to 2016, they are indeed shocking and appear to be a money-making scheme which is not in line with the original mandate of Eskom.

Should Unions Strike for a Just Transition?

By Sean Sweeney - Trade Unions for Energy Democracy, October 10, 2017

After more than a decade of tenacious union lobbying of government negotiators, the words “a just transition of the workforce” was written into the preamble of the 2015 Paris Climate Agreement.

But now what? Encouraged by Paris, unions around the world have committed fresh energy towards giving Just Transition some practical significance, otherwise it will remain little more than a moral appeal for fairness in a corporate-dominated world economy where both morality and fairness are increasingly scarce.

This Bulletin features an article by TUED coordinator Sean Sweeney on the recent commitment made by unions in South Africa to strike for a “just transition.” However, the goal of the threatened strike is to halt the plan of the national utility (Eskom) to close 5 coal-fired power stations, a move that threatens 40,000 jobs.  Titled “When Stopping Coal Plant Closures Makes Environmental Sense” the article, which first appeared in the Fall 2017 edition of New Labor Forum, urges environmentalists not to support the closures, but to join with unions in opposing Eskom’s proposed actions.  Supporting the closures, argues Sweeney is “a poisoned chalice,”  that “will separate the environmental movement from the unions with whom it should be allied. And whatever environmental gains the 5 closures might produce at the margins in terms of avoided emissions and pollution levels will be more than offset by the impact of ‘jobs versus environment’ political fragmentation. This is why the Eskom closures should be opposed, but opposed in a way that might lay the political foundations for a more fundamental energy transition.”

Since the article was written, Eskom’s war with the private renewable energy companies has continued, with the utility pushing back against high-cost of power purchase agreements for wind and solar power. TUED union NUMSA and also the new South African Federation of Trade Unions (SAFTU) have called for a socially owned renewables sector in order to allow for a just energy transition from the present coal-dominated power system to one that can take advantage of South Africa’s abundant supplies of wind and sunshine.

Will Public Banking Bring More Clean Energy Programs to California?

By Nithin Coca - Sharable, September 28, 2017

At a recent forum at Oakland City Hall, experts from the public banking and community energy sectors explored how the creation of a public bank could help communities transition to clean energy while creating economic opportunities.

"We need to build a more sustainable world, we need to be using energy that is positive for the environment and community, and we need to do it a way that support local jobs," said Rebecca Kaplan, Oakland City Councilmember Rebecca Kaplan who is leading the public bank creation efforts.

The forum took place in Oakland, California, just days after the approval of a resolution to fund a feasibility study by the City Council, with support from neighboring cities. The first and only public bank in the U.S. is the Bank of North Dakota.

"A public bank can really create community wealth in ways other institutions are not capable off," said Gregory Rosen, the founder of High Noon Advisors, a local consulting firm with experience in clean energy investing. "It can help people of different backgrounds and income levels come together, for the good of the community."

The Debt Before the Storm

By Lance Selfa - Socialist Worker, September 26, 2017

THE SOCIALIST German playwright Bertolt Brecht once wrote that "famines do not simply occur; they are organized by the grain trade."

A similar observation could be made about Puerto Rico today. Replace "famine" with "natural disaster," and the "grain trade" with "U.S. colonialism," and you have a succinct summation of the human disaster that is unfolding on the island today.

Puerto Rico is reeling in the aftermath of landfalls by two huge hurricanes, Irma and Maria, in the space of a few weeks. As this article was being written, most of the island remained without electricity, and 70,000 residents could be in danger if the damaged Guajataca Dam failed. People all over the island are contending with flooding and food shortages--malnutrition and outbreaks of disease are real possibilities.

Any area that suffered the blows of two powerful hurricanes in succession would face major challenges.

But Puerto Rico isn't just any area. It is a colony of the United States--its oldest, in fact.

Over the last two decades, Puerto Rico's economy has been systematically degraded while Wall Street and European capital loaded up its public sector with more than $70 billion of unpayable debt.

As a result, the basic infrastructure of the island--its health care, water and power systems--were already in the grips of a desperate crisis before the hurricanes hit. For ordinary Puerto Ricans, life under successive austerity regimes had become increasingly intolerable--and it will only become more so now.

Rising from the ashes, a Buffalo suburb ends its dependence on coal

By Elizabeth McGowan - Grist, July 11, 2017

Sixteen months ago, the coal-fired Huntley Generating Station, which sits on the banks of the Niagara River, stopped producing power for first time since World War I.

Erie County lost its largest air and water polluter. But the town of Tonawanda, a working class Buffalo suburb 13 miles downstream of America’s most storied waterfalls, also lost its biggest taxpayer.

The impact of Huntley’s decade-long slowdown — and finally shutdown — hit this upstate New York community like a punch to the gut.

In just five years, between 2008 and 2012, Huntley’s pre-tax earnings tumbled by $113 million as it operated far below capacity, translating into a combined revenue hit of at least $6.2 million to the town, county, and local school district. That precipitous decline came when state education funds were also shrinking. Belt-tightening wasn’t enough; 140 teachers lost their jobs. Three elementary schools and one middle school closed their doors.

Rebecca Newberry, a 35-year-old former bartender and LGBT-rights activist, saw her home town facing the same fate that has befallen so many other Rust Belt communities that fell on hard times following an industrial exodus. She was determined not to let it happen to the place where she grew up. And she was fortunate enough to find a diverse group of allies who were willing to fight for their survival.

By combining the resources of her nonprofit, the Clean Air Coalition of Western New York, with area labor unions and other community groups, Newberry helped to hatch a plan for Tonawanda’s next chapter — and provide an inclusive, equitable template for other blue-collar towns facing the loss of dirty energy jobs and other polluting industries. (The jargony term for this in advocacy circles is “just transitions.”)

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No plan for the Valley; No plan for the workers; No plan for the climate

By IWW Melbourne - Australia IWW, March 15, 2017

As the closure of the Hazelwood power plant looms closer, it is becoming increasingly clear that the government has no transition plan for the LaTrobe Valley. It's imperative that the workers in the valley develop a program of their own to transition away from coal.

The behemoth is shutting down. Completed in 1971, Hazelwood - the Soviet-era beast of a power plant that produces up to a quarter of the state's energy - is scheduled to shut in the next few weeks.

Following the privatisation of the energy industry and years of official neglect, this is just "Another kick in the guts for the Latrobe Valley," as the CFMEU's mining and energy president puts it. The Andrews State Government has, at the last minute, shown some interest in the almost 1000 workers set to lose employment, offering grants and funding amounting to $226 million. The federal government is still scrambling to respond. 

The remaining three plants in the valley remain in a precarious position. Brown coal is plentiful in the valley, but so dirty and so low in value that there's virtually no export market for the product. It's burnt there or it's not burnt at all. But the plants haven't been updated for years, and even basic maintenance is lax, allegedly contributing to the horrific fires that burnt through the Valley two years ago. In the face of climate change, coal - and brown coal especially - is rapidly becoming a "stranded investment" that can't turn a profit and which no one will buy.

This is a good thing for the planet's climate and - in the long run - for our communities. It's also been predicted for years. So why isn't there a transition plan for the LaTrobe Valley?

Successive governments have been in denial about the realities of a shifting energy market, pinning hopes on pipedreams like clean coal and carbon sequestration.

Investment that could have been directed at rebuilding grid infrastructure to better suit renewables has instead been sunk into the pockets of multinational companies without ties to the local communities, and who answer to no one but their shareholders. Even the comparitively progressive Andrews government has, until very recently, shown no interest in the Valley - but their response has been a piecemeal kneejerk reaction to pressure bought to bear by workers. There remains no plan for the Valley.

There is no escaping the realities of climate change. Coal is going out of business - and not before time! Nevertheless, unless a thoughtfully planned and executed transition to a coal-free economy is rapidly developed, the region which has underpinned Victoria's economic development throughout the 20th and 21st centuries will once again be burnt. This plan could take many forms, but the decision must be made by those wo work and live in the Valley. Groups like voices of the valley and the earthworker cooperative are the only hope for a democratic, truly just transition out of coal for the LaTrobe Valley. Workers can't rely on the government - state or federal - to do the job for them.

How the Energy Boys F#@*%d Over California

By David Macaray - CounterPunch, March 8, 2017

In 2000 and 2001, one of the biggest, filthiest, most audacious and wide-scale con jobs ever perpetrated on a state population occurred in California. And even though many citizens chose, reflexively, to blame the “government,” the entire fiasco (other than the state assembly stupidly laying the groundwork for it) was invented and put into play by the private sector.

And once the smoke cleared, and people realized what just happened, California had lost roughly $40-$45 billion, its first governor in history had been recalled, the state’s second-largest energy company PG&E (Pacific Gas & Electric) had gone bankrupt, and Austrian steroid hound Arnold Schwarzenegger was now governor.

It all began in 1996, with Republican Governor Pete Wilson. He and the state assembly, seeking to stimulate competition, pushed through a law (AB 1890) calling for the “partial deregulation” of the energy market. Not to point fingers, but if there were any justice in the world, Wilson would’ve been taken out and shot with a rusty bullet.

Basically, what happened in the wake of AB 1890, was that the energy companies, seeing the opportunity for astronomical profits, began manipulating the market in ways that no one had ever witnessed or even imagined. They did it by creating shortages where none existed. Before this began, California had a generating capacity of 45 gigawatts (GW). Demand was still only 28GW. Things were good. There hadn’t been “blackouts” for 40 years.

But energy suppliers (notably Enron, a Texas company) had devised a plan. With deregulation of wholesale pricing now in effect, the hoary, time-honored “supply and demand” formula raised its ugly head. Inevitably, the energy suppliers began taking steps to diminish supply and increase demand, albeit artificially.

In order to depress supply and raise the price, they began messing with the grid. They illegally shut down pipelines and intentionally took power plants off-line during periods of peak demand by pretending that these facilities needed “maintenance.” Of course, it was all a lie. Anything to create a shortage.

They exploited loopholes. Because California law allowed energy companies to charge higher fees when the energy they sold was produced out-of-state, they engaged in a form of “megawatt laundering” (analogous to “money laundering”), where they disguised the source—disguised it to make California-produced energy appear to have been produced out-of-state.

They also ran “overscheduling” scams. Essentially, this consisted of purposely overscheduling the transportation of electricity along power lines in order to get the state to pay them a lucrative “congestion fee” for willingly alleviating the congestion (even when they had no intention of using them). The state had no choice. People need electricity. You do everything you can to provide it.

NUMSA statement on Eskom CEO’s resignation

By Irvin Jim and Patrick Craven - NUMSA, November 16, 2016

The National Union of Metalworkers of South Africa welcomes the resignations of Eskom CEO Brian Molefe and Board member Mark Pamensky, and calls for the resignation of the entire board and divisional executives who are all implicated in the many serious allegations against Eskom in the former Public Protector’s report, the State of Capture, which include:

1. Irregularities in an Eskom deal with a Gupta-0wned mining company, Tegeta, which won a R2-billion profit from a transaction involving Glencor’s sale of Optimum Coal Mine and its holding company to Tegeta.

2. Eskom letting Tegeta sell off part of Optimum Coal Terminal — a deal which Ajay Gupta told the public protector had netted him a profit of R2-billion, which might constitute a contravention of the Public Finance Management Act (PFMA) as Eskom “acted solely for the benefit of one company”.

3. Eskom’s authorisation of a R660-million coal prepayment to Tegeta at a special board meeting, hours after the Gupta company informed Glencor they were R600-million short of the money to buy the mine and that banks had refused to come up with the cash. This could violate the PFMA and amount to fraud as the money was not used to fund the mine but to buy the shares of the holding company — contrary to what Tegeta said publicly.

4. A 10-year contract with Tegeta to supply 1.35 million tons of coal a year to Majuba power station at roughly R284 per ton from their Brakfontein mine, despite evidence that Eskom’s technical team were concerned about the coal’s quality. Eskom paid R134-million to Tegeta for substandard coal it knew it could not use in its power stations.

Eskom has even victimised two Numsa members whom they are trying to make scapegoats for this Brakfontein deal. One has been dismissed and the other suspended for over a year and Numsa will continuously fight for justice for these members.

5. Molefe’s “cosy” relationship with the Guptas which are substantiated by cell phone records which show that he phoned Ajay Gupta 44 times, and Ajay Gupta called him 14 times, between August last year and March this year. Between August 5 and November 17 2015, he was placed in Saxonwold on 19 occasions.  Atul Gupta admitted to Madonsela that Molefe was a “very good friend”, yet Molefe had not declared his relationship with the Gupta family.

All these are allegations which the proposed Commission of Enquiry must investigate, but they are sufficiently serious to make it impossible for Molefe and the Eskom Board to continue with business as usual and they must stand down.

This however raises the question of who should replace them, and also who should be on the boards of other state-owned entities about several of which the State of Capture report also expresses concern, including Transnet, Denel, SAA and the SABC.

Numsa has consistently opposed privatisation of public entities, called for the renationalisation of Arcelor Mittal SA and Sasol and the nationalisation of other strategic industries. But it is now clear that SOEs all need to be run in a far more democratic and socially responsible way.

Public utilities should have an entirely different set of objectives from private companies – to produce commodities and deliver services which people need, as efficiently, safely and economically as possible and to protect the environment and the economic prospects for future generations.

This is impossible however when SOEs are run as they are today, as if they are private businesses, motivated exclusively by the pursuit of maximum short-term profits, regardless of the impact their activities have on local communities, the environment, their workers and the long-term future of the economy, and also as auxiliary service providers to the dominant private capitalist system.

The underlying problem at the heart of all Madonsela’s allegations is that SOEs have become entangled with the corrupt private sector through outsourcing of ancillary activities and thus been infected with the disease of corruption, which is inherent in the capitalist system.

While Eskom itself remains state-owned, it has done huge deals with private companies, in particular those in the coal mining industry, many of which feature in the former Public Protector’s allegations.

This leads to a particularly blatant form of corruption arising from the SOE directors’ close relations with the state, corrupt politicians and private companies, which creates the crony capitalism which Madonsela has exposed.

When challenged by Numsa about Eskom’s outsourcing of coal mining, Molefe argued that he was not interested in owning the bakery but only in the delivery of the bread.  But coal mining and electricity generation are inextricably linked together.

If public ownership is to achieve the social objectives as defined above it will have to embrace all the key sectors of the economy so that they can be integrated into a coherent development plan of production.

This will however be impossible if their boards are full of profit-motivated business men and women. The new Eskom Board must reverse this trend and comprise of democratically elected representatives of the workers, communities and civil society, so that they are run in the interests of South Africa as a whole and not their selfish interests and those of corrupt cronies.

This should then set the pattern for all SOEs and other industries which need to be nationalised so that we can create a socialist South Africa based on the Freedom Charter in which the wealth of the country is really transferred to the people.

Carbon Bubble News #122

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