How much you really pay for electricity in South Africa

An increase of 31% in fixed charges levied by Johannesburg’s City Power for electricity over the last two years means that post-paid (credit) customers now don’t even get 100kWh of usage for R1 000. Less than 100kWh is an astonishingly low amount.

The two fixed monthly charges – a network charge and capacity charge – totalled R631.16 including VAT per month in 2019/2020. Today, they total R825.32. This is charged by the metro’s utility regardless of how much electricity is consumed.

An analysis by Moneyweb in 2019 revealed that Johannesburg residents who are serviced by City Power and are not on prepaid continued to pay the most for electricity among the country’s major metros.

But comparing the cost of power at just R1 000 in spending is not entirely fair. Comparing the amount of electricity received for R2 000 removes the distortion of those high fixed charges somewhat.

At that level, customers in Johannesburg receive about the same amount of electricity as those in eThekwini. This is due to the latter’s high price per kilowatt-hour on its basic tariff plan (rates on time-of-use plans that require smart meters are more reasonable). At these more elevated levels of usage, eThekwini tariffs are as pricey as City Power’s.

Apples-with-apples comparisons are difficult. The way tariffs are designed across the various metros differs greatly:

• Some have fixed charges, others don’t;
• Some have flat-rated tariffs regardless of usage;
• Those that charge different rates depending on levels of usage (so-called inclining block tariffs) don’t all use the same sized blocks;
• Tshwane used to bill seasonally with different rates for summer and winter, but this has changed since 2019; and
• Eskom is included, as sizeable areas in Johannesburg (Sandton and Soweto) are supplied directly by the utility.

Rather than attempt to compare the base tariff, in other words the cents-per-kilowatt-hour rate, the methodology used here is to calculate how much electricity a household will receive for two amounts: R1 000 and R2 000.

Again, as pointed out in 2019, this is the lived experience of customers.

Importantly, fixed charges on some tariff structures distort matters, making a simple comparison between the rates per kilowatt-hour meaningless. This methodology removes this distortion.

* All kWh amounts rounded down; all amounts include VAT; excludes indigent households. 1 For houses valued at more than R400 000 but less than R1-million. 2 For houses valued at more than R1-million

The situation in Johannesburg is bizarre and increasingly untenable: post-paid/credit customers pay among the most for electricity across metros, while prepaid customers pay among the least.

For R2 000 in spend, Johannesburg post-paid customers receive more than 30% less electricity because of the fixed charges.

The municipality has repeatedly attempted to introduce a R200 (R230 including VAT) monthly surcharge for prepaid customers, but continues to U-turn on the proposals.

Until it implements some sort of fixed monthly charge, City Power prepaid customers will continue to enjoy among the cheapest electricity across the metros. Effectively, these customers are being subsidised by City Power’s post-paid ones.

Two-year snapshot

A further analysis reveals how tariff changes over the past two years have affected how much electricity you will get for the same amount of money.

It’s not as simple as assuming that two back-to-back annual increases of around 15% would result in 30% less electricity for the same amount of money.

Metros seldom keep tariff structures the same for long periods of time. Changes are made to methods of charging (block sizes in incline block tariffs are changed, fixed charges are implemented or removed, and so on).

From this comparison, the biggest declines in the amount of electricity received are for City of Jo’burg post-paid and eThekwini (Durban) customers. It is no surprise that tariffs for these two groups are the highest among the metros.

* All kWh amounts rounded down; all amounts include VAT; excludes indigent households. 1 For houses valued at more than R400 000 but less than R1-million. 2 For houses valued at more than R1-million

• This article was originally published by Moneyweb and is republished by TechCentral with permission