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Electricity: Who pays what

Distortion-free comparison shows the playing field is anything but level.

Joburg residents serviced by City Power who are billed monthly pay the most for electricity among the major metros in South Africa. This is due to two fixed monthly charges – a network charge and capacity charge which together total R631.16 including value-added tax (Vat) per month.

An analysis by Moneyweb that compares the tariffs for a single-phase 60A residential connection to a single point of supply (which obviously excludes bulk supply to sectional title schemes) shows the stark differences in tariffs between the major metro municipalities as well as those directly supplied by Eskom (Sandton and Soweto).

Tariff structures across the various metros are exceedingly complicated and almost entirely not comparable. Those which charge different rates depending on levels of usage (so-called inclining block tariffs) don’t use the same sized blocks. Some have flat-rated tariffs. Others, like Tshwane, bill seasonally with different rates for summer and winter (City Power also bills seasonally on certain 80A tariff plans, excluded from this comparison).

Comparing apples with apples

Rather than comparing base tariffs levied in terms of cents per kilowatt hour (kWh), the methodology calculates how much electricity a household will receive for three amounts: R500, R1 000, R1 500. This is the lived experience of customers. Importantly, fixed charges on some tariff structures distort matters making a simple comparison between the rates per kWh meaningless. This methodology removes this distortion.

In Joburg, because of the fixed charges, there is a sharp divergence between effective tariffs on prepaid and those for credit customers. For R1 000, a prepaid customer will receive 575kWh, while for the same amount a credit customer will receive less than half of that (239kWh).

The municipality attempted to introduce a monthly surcharge of R230 including Vat for prepaid customers in July but made an abrupt U-turn.

Until it implements some sort of fixed monthly charge, City Power’s prepaid customers will continue to enjoy among the cheapest electricity in South Africa.

Effectively, they are being subsidised by City Power’s credit (postpaid) customers.

How many kilowatt hours different users get …

Tariff

R500

R1 000

R1 500

Eskom Homepower 4

246

571

784

Eskom Homelight

343

651

853

Cape Town Domestic1

218

436

645

Cape Town Home User2

166

414

645

Joburg City Power prepaid

311

575

806

Joburg City Power residential

– (Note4)

239

590

Ekurhuleni Tariff A (prepaid/credit)3

343

603

675

Ekurhuleni Tariff B prepaid

224

454

685

Ekurhuleni Tariff B credit

209

439

670

eThekwini

105

359

613

Tshwane winter (Jun to Aug)

128

367

605

Tshwane summer (Sep to May)

154

440

709

* 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 R1 million or more

3 Any customer on this tariff whose average monthly consumption (calculated over the previous 12 months) equals or exceeds 850kWh will be moved to Tariff B and will have to remain on Tariff B for a minimum of 12 months.

4 Not possible, given the monthly service charge (R159.95) and capacity charge (R471.21)

At the level of R1 000 a month being spent on electricity, City Power residential (credit) users remain worst-off, with only 239kWh being received.

Tshwane and eThekwini residents also receive comparatively little bang for their buck, given the fixed charges.

At the R1 500 a month level, arguably a typical household, the divergence between tariffs is less stark. Residential customers in most metros will receive between 600kWh and 700kWh for that level of spend. Directly-supplied Eskom customers are the best off (as are City Power prepaid customers), netting around 800kWh for their spend.

Fixed monthly charges

Eskom Homepower 4

Network charge – R120.90 (R4.03 per day)

Cape Town Home User

Network access and administration charge (fixed service charge) – R163.62

Joburg City Power residential

Service charge – R159.95

Capacity charge – R471.21

Network surcharge >500kWh – 6.9c/kWh

Ekurhuleni Tariff B prepaid

Fixed charge – R13.89

Ekurhuleni Tariff B postpaid

Fixed charge – R46.62

eThekwini

Service charge – R291.29

Tshwane winter (Jun to Aug)

Fixed monthly charge – R230

Tshwane summer (Sep to May)

Fixed monthly charge – R230

Aside from City Power’s steep fixed monthly tariffs for residential customers (it also levies a network surcharge of 6.9c per kWh including Vat for consumption above 500kWh), there are a number of other tariffs which have fixed monthly charges.

These include one Eskom residential tariff (Homepower 4), which levies a network charge of R4.03 per day regardless of whether customers are on prepaid or credit, a fixed charge for Ekurhuleni residential customers on Tariff B, Cape Town’s Home User charge for houses valued at over R1 million, a steep service charge in eThekwini, and the controversial fixed monthly charge of R230 introduced by the City of Tshwane in July.

 

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Great article and much needed. I’m going to apply for a prepaid.

It is high time that Eskom makes it compulsory for all its employees to pay any arrears electricity bills in their names. A simple check against their ID numbers and a compulsory salary deduction would do the trick. So too would a major campaign of switching off the power to areas like Soweto to force the freeloading miscreants to pay lead to billions in savings and bad debt recovery.

This is not possible due to the South African inverse correlation between actions and consequences. The greater the debt (Soweto) the smaller the chances of recovery. The more horrendous the crime (Marikana, Esidemini) the smaller the possibility of punishment.

It’s a way the municipalities recover money from the payers for servicing non-payers.

Ethekwini is the worst and should not be a surprise with the mayor they had.

Rotten to the core.

Good article, however the reasons for the movement to fixed charges are not dealt with. With increasing embedded generation such as rooftop PV, municipal distributors will have to recover fixed costs from fixed charges in future, and price the energy portions cost-reflectively. If they want to finance the distribution business from volumetric charges(i.e. R/kWh sold)they will not survive the energy transition at hand, and the price signals will drive the wrong behavior. What is lacking is a common vision of where the industry is going and proper change management, instead of every municipality doing its own thing.

Msunduzi (Pietermaritzburg) has a large fixed component for credit customers – R739.81 for a 60A line. Seems our unit charge is a fortunately lower than Joburg. A comparison using the 60A in the article:
Credit R500 – NA, R1000 – 222 & R1,500 – 650
Prepaid R500 – 265, R1000 – 529 & R1,500 – 794

I have CoJ prepaid, via CitiQ (which is one of CoJ’s third party service providers). For my R500, which I purchase via my banking app, I get 194.9kwh a far-cry from the 311kwh detailed above.
The big/only advantage of prepaid is that there are no nasty surprises to try and sort out when your monthly account arrives. Having had significant experience of CoJ’s shocking billing resolution, I’d say that if I’m paying a premium for prepaid, then the juice is worth the squeeze.

The problem, of course, is that there’s a third-party service provider involved. They would levy certain charges/fees on top of the regulated tariffs. The above analysis is against published tariffs from providers.

It is unbelievable how the state machinery managed to turn things around. Instead of them working for the citizens, the citizens are working for the state. They use their law making ability to put themselves in an unassailable position, forcing citizens to pay for their follies, mistakes and entertainment. The shoe is clearly on the other (wrong) foot.

Ah – but there is light at the end of the tunnel. In CoJ – City Power ramps up its costs significantly to account households, but those that can are taking themselves off the grid and switching to gas appliances – so shortly the only parties who will be called upon to sustain City Power and by extension Eskom will be Soweto – so City Power – so-where-to from here

I think you are fooling yourself, into believing that by removing yourself from the grid, you relocate the burden of payment to those not paying. The councils will simply move the revenue collection model to another service .. ie: sewage, water , rates . And will come up with all kind of levies that are not bypassable..

That’s aside from Eskom’s treasury bailouts that are inevitably borne by the taxpayer. No escaping those.
That being said, there’s too much focus on the non-payment of electricity by some citizens. That’s just picking peas off your plate. It’s Medupi and Kusile that are clearing out your deep-freeze.

A large amount of variables to compare here.
I checked the Ethekwini tarriff book – I can’t find a fixed monthly charge referred to above, they build it into the per kWH rate.
Currently R 1.9714 / kWH for a typical residential property pre or post paid.
So for your R500 = 253 kWH.
A slightly different outcome.

What is shocking is how the consumer is taken to the cleaners by the municipalities/metros. No need to mention the indigents as the paying consumer is ‘financing’ them as well. You fork out R1 000,00 or R1 500,00 and only get whatever electricity in return. It’s no wonder the S.A. economy is down the drain. When is this robbing Peter to pay Paul ever going to stop!!!!

Article forgot to mention many ANC members in Soweto don’t pay. They need a reason to vote (ANC) Other than good, clean, efficient running of the country.

Any idea what the commission the re-sellers get for prepaid electricity?

Thanks for the article. I received my municipal account today from CoJ. R12000 for the month. R7000 for electricity. This is for one month in residential area. We have 8 people living on the property. Who can afford these exorbiant prices?

The article is out of date. My bill reflects a service charge and a network charge plus VAT of more than R800.

I have been tracking per KwH hour cost for a while and here is what i actually pay for COJ electric over the past 3 years, this takes into account all the extra costs inc VAT / kwH hour

2017 2018 2019
R3,24 R3,41 R3,61

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