New Eskom tariff plan ‘needs to face class action suit’

While it’s been lauded for ending load shedding, power utility Eskom is facing another challenge: explaining the reasoning for its business model in which customers buying in bulk do not geta discount, or reduced rate.

Customers purchasing electricity below a threshold of up to 600kWh units are charged a tariff of R2.45/kWh, while those purchasing above 600kWh are charged a higher tariff of R3.78/kWh.

Electricity tariff higher the more you buy

Eskom spokesperson Daphne Mokwena said the controversy sparked by the tariffs had to do with “the incline block tariff” – promising to explain the reasoning through an e-mail, which was not received.

Energy expert Tshepo Mahlaba said purchasing more electricity from Eskom meant being charged at a high rate, “which does not make economic sense – Eskom’s greedy economic model.

“Globally, in economics 101, when you buy in bulk you get a discount, or a reduced rate.

“At Eskom when you buy electricity above 600kWh you get penalised and charged a huge rate, close to double.

“The reason Eskom has used this over the years was to prevent those who can afford it to deplete energy security. They then urged customers to buy solar equipment to reduce demand and assist Eskom,” said Mahlaba.

Customers, he said, heeded Eskom’s call “at a huge cost and sacrifice”.

“Eskom is changing its tune when seeing a reduction in income and is now charging a high tariff for customers who have installed solar on their roofs.

“These are customers who helped Eskom reduce demand, for it to be able to deal with supply challenges without stressing the grid. We cannot let Eskom get away with this – it needs a class action,” he said.

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Eskom aims to increase network costs

Having presented its tariff plan to the National Energy Regulator of South Africa in January 2021, Eskom made it clear its objective was to significantly increase network costs. These included transmission, distribution and transformer costs.

With significant fixed daily network charges independent of usage, Eskom said it wanted to move to a tariff structure.

This means that South African households and businesses would pay a much higher fixed charge, regardless of whether they use its electricity or not.

With the monthly bill for households with solar power set to soar, Eskom’s radical electricity pricing could see an increase in fixed capacity charges, disproportionally affecting people using less electricity, Mahlaba said.

People using solar panels could pay far more than before, due to having to pay daily fixed costs to Eskom to be connected to the grid.

New electricity tariff plans were also aimed making Eskom’s electricity more attractive than generating their own power.

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