Eskom generates an ethical dilemma

MORAL philosophers indulge in intellectual masturbation when ethical dilemmas are thrown their way. Courtesy of an enthusiastic whistle-blower at Eskom who found a seemingly conscientious MP, Pieter van Dalen, on the opposition benches, a classic ethical dilemma has been put on the table for those of us so inclined . The whistle- blower leaked a confidential document. The MP happily accepted it and after perusing its content put it all in the public domain on grounds of public interest.

Eskom is unhappy. It claims commercial sensitivity required the document to remain confidential. The chair of the parliamentary portfolio committee on public enterprises, Vytjie Mentor, labelled the MP’s behaviour unethical and illegal. An ethical challenge can be clearly stated in a question that might have been yanked from an ethics examination paper. Was the opposition MP ethically justified in his actions? The Democratic Alliance (DA) politician’s action is ultimately justifiable but it is not so obvious why. Let’s rehearse the moral argument in his favour.

Not all of the salient facts are known or agreed on by Eskom, many members of Parliament and the rest of civil society. This makes it difficult to assess whether the MP did the right thing since the utilitarian principle he acted on, which I discuss shortly, is not controversial. It is the principle’s application to the facts that matter. An absence of factual certainty, however, ultimately helps his utilitarian case.

There has been widespread public suspicion for months now that Eskom has been selling electricity to large corporations such as BHP Billiton and Anglo American at unit prices smaller than those of electricity sold to municipalities and ultimately millions of households. Suspicion has been that the major electricity tariff hikes we have been dumped with may well have been smaller but for these contracts containing preferential rates of supply to large companies.

One particularly callous upshot of all this is the possibility that the little people are cross-subsidising the operational expenditure of the big guys. Add to all of this the additional macroeconomic insult that some companies bring iron ore from abroad, smelt it here and then export the intermediary product for further use in value chains elsewhere, and Eskom’s preferential treatment goes from being economically unfair on individual households to being economically disastrous for some of our industry sectors .

However, while this story makes sense in principle, at least one official from the National Energy Regulator of SA (Nersa) made a counterargument in a radio interview several months back. The counterclaim was that while the nominal unit fee charged for electricity to the big guys is lower than that paid by the rest of us, the cost of supplying electricity to big clients is significantly less, so that profit margins generated for Eskom from those customer segments are in fact much higher than profits flowing from the segment comprising us little people. The unspoken implication was that the big guys, if anything, may well be cross-subsiding us. Supply cost structures are not uniform across customer segments.

These are two equally coherent stories. But not both of them can be true. It is a matter of empirical investigation which version is correct. Given the impact of the tariff hikes on inflation and thereby the standard of living of millions of South Africans, finding out which of the stories is true matters. When massive loans like the one granted by the World Bank are added to the mix, with the reality that future generations will be saddled with debt not of their own choosing, the lack of factual certainty becomes ethically significant. We are forced to adjudicate between the Nersa story and the contradictory intuitions of civil society and ordinary South Africans.

That is the context within which the DA MP’s decision was taken. What is an MP to do when he or she is landed with a document that sheds light on the material disagreement about certain facts that are of substantive ethical significance? This is, furthermore, against the background of a cabinet minister who has, according to the MP in question, failed to offer illuminating answers to parliamentary questions on the matter, so “second best” solutions are off the table.

The MP applied an ethical principle that can be roughly stated as follows. If the overall consequences of doing something will have overwhelming benefit for society and no gross injustices are suffered in the process, then that action is ethically justified. This principle, with its built-in consideration about justice, is surely reasonable. Killing someone would be grossly unjust even if it would make most of us happy. The principle is therefore not blind to justice.

However, given that Eskom is a monopoly and that the wellbeing of millions is affected by the price hikes, directly and indirectly, getting to the bottom of whether or not Eskom’s factual claims are accurate matters. No gross economic injustice will result to Eskom, BHP Billiton or Anglo American . Since the document’s public existence takes us a step closer to resolving these factual disputes, the whistle-blower and MP’s actions, even if possibly illegal, are ethically justified.

http://www.businessday.co.za/articles/Content.aspx?id=107082