Eskom has acknowledged that some of its clients will see a considerably higher tariff increase on April 1 than the average 12.74% approved by the energy regulator Nersa.
Others will benefit from lower increases due to the restructuring of its tariffs.
“We know this is a bit of a shock to the system, but it is something that has to happen and Nersa has tempered it much more than what Eskom wanted,” Eskom GM for regulation Hasha Tlhotlhalemaje said at a media round-table last week on the impact of the new tariffs.
The utility, however, denied that its tariffs were anti-poor as labelled by Chris Yelland, energy adviser to the Organisation Against Tax Abuse (Outa).
Business Day earlier reported that households on Eskom’s Homepower 4 tariff who limit their electricity usage to 350 kWh/m will see a 37% increase in their monthly bill.
According to Eskom most of its residential clients are on the Homelight tariff which will see an 18.26% increase up to the consumption level of 350 kWh/m on a 60 A connection. Poor households may fall into this consumption bracket, but middle-income and even lower-middle-income households will mostly use more.
Eskom pointed out that this could be completely mitigated by the 50kWh/m of free basic electricity (FBE) provided by the government but acknowledged that FBE is difficult to access. Electricity & energy minister Kgosientsho Ramokgopa has said FBE reaches only about 10% of the poor it is intended for, and vowed to revamp the system.
The “differentiated impact” of the tariff increase is the result of a restructuring of Eskom’s tariffs that the utility has been asking for since 2020. Nersa eventually approved it earlier this year, instructing Eskom to phase in some of the increases.
Eskom senior manager for electricity pricing Terry Njuguna said the new tariff structure would ensure that Eskom’s cost was properly reflected. Tariffs have also been simplified and unintended subsidies removed.
Several cost items now included in the variable energy charge have been unbundled. This means that consumers will see higher fixed charges and lower cost per unit consumed, which may negatively affect consumers who use little monthly electricity.
In addition, the inclining block tariff for households that applied higher charges above a set threshold every month, was scrapped. This removed the subsidy households using more electricity paid to cushion smaller users.
According to Njuguna, Eskom’s industrial customers that use electricity day and night (high load factor) will see higher increases than those using electricity for shorter periods during the day. In general, she said the new tariff system is simplified, fairer and more transparent.
Eskom will put calculators on its website to assist its customers assess their individual bills. These adjustments only pertain to clients buying electricity directly from Eskom.
Nersa approved an average increase of 11.32% on the tariffs Eskom charges municipalities for their bulk purchases.
Municipalities must incorporate the Eskom charges in their budgets that must be drafted, published for public comment and finalised before end- May for implementation on July 1, after getting Nersa approval.
Municipal tariff expert Hendrik Barnard said the impact varied considerably from municipality to municipality. In calculating the impact on several municipalities, he had seen hikes of 8%-15%.
Chris Bosch, CEO of Rural Maintenance that manages electricity supply on behalf of the Mafube local municipality in the Free State, said the increase in the bulk purchase cost of the four towns in the municipality varied at 7%-17% with the total Mafube bill expected to increase 15.63%.
“The big shock,” he said, “is that the cost during the nine summer months increases by more than 20%. That is going to be devastating.”
Barnard expressed concern that municipalities did not have the skills or data to assess the effect of Eskom’s tariff increase and restructuring on their future bulk purchase cost in the limited time available.
He suggested that Eskom, that has all the relevant data, should undertake these studies on behalf of municipalities and that Nersa allow municipalities to adjust their tariffs later if the calculations were not done in time.
He also called on Eskom to provide municipalities with a five-year price path, since some of the elements of the restructuring will be phased in over the next few years.
Njuguna said Eskom has reached out to municipalities and will have further engagement with them.
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