Through the combined actions of the City of Johannesburg, City Power and energy regulator Nersa, South African consumers are facing a looming, dire cost-of-living crisis.
Just when South Africans thought there was light at the end of the tunnel, City Power has pulled the rug out from under them with the stealthily executed introduction of load reduction – otherwise known as load shedding.
Claims that this move was necessary due to increased electricity usage during the winter months seem disingenuous. Temperatures have dropped, people are staying indoors more, and they need to keep warm. Consequently, electricity usage is bound to increase.
This begs the question: how is it possible that, despite their many years of combined experience, neither Eskom nor City Power had made any contingency plans to mitigate higher seasonal demand?
Adding insult to injury, City Power proceeded to slap its some 250 000 prepaid customers with a R200 service fee for a service not being delivered with consistency. Even more gallingly, this fee hike was introduced without consultation, and with just one week’s notice, effectively profiting from an additional R50-million from hard hit consumers each month.
The justification? The new fee and increased energy cost was the result of a cost and supply analysis conducted during the City of Johannesburg’s most recent Integrated Development Plan workshop. This is after Eskom triumphed in a court decision against the city for an account that hadn’t been settled since October 2023.
Meteoric hike
This fee hike was approved by Nersa as an additional cost on top of the 12.7% tariff increase it had also approved. Moreover, Eskom is seeking an additional 36% tariff increase for 2025. This means that municipal power customers could see a meteoric 43.5% hike in electricity costs.
Meanwhile, many South African households are being forced to drastically cut back on the basics given persistently high inflation and interest rates.
To underscore this point, Alumo Energy recently performed some calculations demonstrating that homeowners could see their electricity bills skyrocket by as much as 60% this winter, thanks to higher winter tariffs, the proposed Eskom electricity tariff hikes for 2024/2025 and the sharp rise in energy usage during the chilly months.
A further, more pertinent example is that we examined the electricity costs incurred by an average household in June and July 2023 using an average of a thousand units used per month. These costs amounted to an average monthly bill of approximately R2 400/month, or R2.46/unit. In conducting the same the same comparison in July 2024, taking into account the various price increases, the same household, using the same number of units is now facing a monthly bill of R3 000/month, or R3/unit.
With these price increases and the continued instability of the grid in mind, it’s little wonder so many South Africans are making the move to solar. According to Eskom’s generation adequacy report, rooftop PV output has more than doubled in less than two years – a trend that seems likely to continue.
It’s time for accountability. South Africans deserve better than to be left out in the cold by the power plays of Eskom, City Power and Nersa – entities meant to serve them, but instead marked by incompetence and opportunism.
- The author, Rein Snoeck Henkemans, is MD of Alumo Energy