Hilton Tarrant, Moneyweb
3 minute read
5 Aug 2019
8:52 am

Joburg residents pay more for electricity than any other metro in SA

Hilton Tarrant, Moneyweb

Tariff structures across the various metros are exceedingly complicated and almost entirely not comparable.

Skewed dynamics: For R1 000, prepaid electricity customers in Johannesburg get 575kWh of power, while those who are billed after the fact get 239kWh. That's a difference of 336kWh … Image: Shutterstock

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

* 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.

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.

Brought to you by Moneyweb

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