Eskom has submitted its latest tariff restructuring application which proposes sweeping changes to the way consumers are billed for their electricity use in future, including a raft of admin-style fees.
Eskom submitted the plan to the National Energy Regulator (Nersa) for its consideration for implementation from April 1, 2023.
The plan proposes a move away from the current inclining block tariff pricing, which charges consumers higher rates for higher monthly consumption. The current pricing regime allows affluent customers with renewable energy sources, who are also connected to the grid, to pay less because of their lower consumption, a reality Eskom is hoping to disrupt.
Under the proposed pricing regime, Eskom wants to introduce a single energy charge (c/kWh), an ancillary service charge (c/kWh), a network demand charge (c/kWh), and a R/day service and administration charge for home users.
This means that consumers will be billed more every month even when using no electricity or if consumption is low. For example, what Eskom refers to in the plan as a Homepower 1 user, would pay R938 instead of R218 without using any electricity.
Eskom said in a statement that this was a revised version of the plans submitted to Nersa in 2020 and that it took into account the latest developments in the electricity supply industry, including the restructuring and unbundling of Eskom into three entities – Generation, Distribution, and Transmission. Eskom said it was proposing the structural changes “based on an updated cost-to-serve study”.
“The tariff restructuring is aligned to the unbundling process that Eskom is going through to accurately reflect the costs of the different services being provided so that energy charges reflect energy costs, network charges reflect network costs, and service charges reflect the cost of customer service and administration,” Eskom said.
The implementation of the new tariff structures would reflect cost drivers more accurately, protect all customers’ interests, avoid unfair cross-subsidies, and enable fair recovery of costs from all users of the grid, it added.
“Existing tariff structures are outdated and need to be modernised to reflect the changing electricity environment, and crucial decisions in this regard are needed to protect the electricity industry,” Eskom group executive for distribution, Monde Bala, said.
“For example, customers are installing their own power generators and are using the grid in different ways, and the wheeling of energy is also expanding. Fair and equitable revenue recovery from all customers for the services provided can only happen with tariffs and tariff structures that are modernised to reflect this changing environment,” Bala said.
“When updating tariffs and implementing structural changes, it is not possible to have zero impact on all customers.”
He added that individual customers “may pay more or less, depending on the change and their consumption profile”.
The regulator will make a decision on the proposals in Eskom’s retail tariff plan following its usual public consultation process.