Electricity tariffs: Here’s why some municipalities charge more for power

Confusion, anger, grief…

These are just some of the emotions you might experience while trying to figure out the different prepaid electricity tariffs charged within your specific municipality, while trying to figure out the reasons for price differences and varying rates across different municipalities is enough to leave even the smartest consumers screaming in frustration.

Various electricity consumers have in recent weeks taken to social media comparing the widely varying prices of prepaid electricity across different municipalities. Attempts to find answers to why the rates are so different, however, has led to even more confusion, as none of the municipalities contacted could provide a simple answer to how their rates are calculated, while the National energy regulator, Nersa, simply ignored requests for comment.

According to several metropolitan municipalities their rates are regulated by Nersa’ municipal guidelines and benchmarks.

Here is a breakdown of the different explanations for how they calculate their tariffs per metro.

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City of Tshwane

The capital city has a range of 17 tariff categories, with the 18^th category embedded with tariffs approved by NERSA, Phillip Nel, Tshwane Member of Mayoral Council for utility services, explained.

Broadly speaking, the tariffs are categorised according to households (including indigent households) or bulk supply for complexes; commercial customers; industrial clients and agricultural or farmland customers.

Households are charged on an incline block tariff (IBT), meaning the more energy one consumes, the higher the rate becomes, said Nel.

Electricity tariffs for household consumers are as follows:

• 0 – 100 kWh – R1.95 per unit
• 101 kWh – 400 kWh – R2.28 per unit
• 401 kWh – 605 kWh – R2.48 per unit
• 650 kWh and up – R2.68 per unit

How much would it cost to power an average three-bedroom household?

The City averages that a three-bedroom household would use about 500kWh per month, with two-bedrooms using an average of 350kWh and those living in estates using about 1 000kWh.

This means that an average three-bedroom household would spend about R1 240 for 500kWh of electricity per month.

“Electricity as a commodity is highly regulated and NERSA issued municipal tariffs guidelines and benchmarks. The city either complies and submits the tariffs based on the network and assets as well as what it costs the City to run business,” said Nel.

Johannesburg City Power

Joburg’s City Power also apply the inclining block tariffs for residential prepaid, with the tariff increasing as consumption levels also rise.

“The current residential prepaid tariff is such that the rate charged increases in step changes as the customer’s monthly consumption increases,” said City Power spokesperson Isaac Mangena.

Joburg’s electricity tariffs are:

R1.69 per unit for the first 350kWh.

Should consumption increase in the same month to 500kWh, the additional 150kWh will be charged at R1.94 per unit.

Tariffs above 500kWh will increase to R2.21 per unit.

“The primary reason for the IBT tariff is to afford low-use customers lower tariffs, to cushion most vulnerable members of society. The tariff is therefore subsidised at low use. However as customers consume beyond the threshold they start to compensate for getting the first 350kWh at the lowest available tariff.  In so doing, only the intended customer benefits from the lowest tariff,” Mangena said.

How much would it cost to power an average three-bedroom household? hold?

According to City Power, a typical residential household can consume between 370kWh-450kWh in a month.

However, 500kWh of power could cost a City Power customer R885.50.

City of Cape Town

The mother city’s electricity rates are calculated based on the value of the property in addition to the standard incline block tariff in an effort to encourage less electricity usage by consumers.

Despite Eskom increasing the national electricity tariff by a steep 17.8%, Cape Town has absorbed some of the increase by running a cost-efficient electricity service, explained MMC for finance Ian Neilson.

“Electricity is cheaper for consumers in Cape Town who use less electricity in terms of the tariff structure. The city always actively encourages customers to use less and pay less,” he said.

In Cape Town the following categories and properties are expected to pay the following:

• Properties valued at over 1 million – R2.40 per unit for up to 600 units.
• Properties valued between R400 000 to R1 million – R2.72 per unit for monthly usage of over 450 units.
• Properties valued under R400 000 – A subsidised R1.64 per unit for up to 350 units. After which, the rate will be R3.21 per unit.

How much would it cost to power an average three-bedroom household?

This means should an average three-bedroom household require 500kWh per month, they would be paying between R1 360 and R1 200 per month.

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Mangaung metro municipality

The Mangaung Metro has two different tariffs per year – one in winter (between June and August) and the other for the summer period, between September and May, in addition to the incline block tariff.

Electricity tariffs for the different seasons are as follows:

• Summer months – R2.03 per unit
• Winter months – R2.52 per unit.

How much would it cost to power an average three-bedroom household?

If an average three-bedroom household were to use 500kWh per month, it will cost them R1 260 in the winter and R1 015 in the summer.

City of Ekurhuleni

The city of Ekurhuleni also uses an inclining block tariff, which is split between residents who receive free basic electricity and those who do not.

Residents who receive free basic electricity do not pay for up to 50kWh.

Ekurhuleni’s electricity rates are as follows for those who do not receive basic free electricity:

These rates do not include bulk electricity for complexes and blocks of flats:

• 0 – 50kWh – R1.58 per unit
• 50kWh – 600kWh – R1.58 per unit
• 600kWh – 700kWh – R2.69
• More than 700kWh – R7.59

How much would it cost to power an average three-bedroom household?

If an average three-bedroom household were to use 500kWh per month, it would cost them a much lower R790.

Buying directly from Eskom

The power utility’s prices for electricity are also regulated by Nersa, but various factors contribute to determining the rate.

These include the quantity of electricity used and the season when used, the size of the supply required, geographic location of the customer, the voltage at which supply is provided, the cost of connecting the supply and the density of the points of delivery where the customer’s supply is located.

rorisangk@citizen.co.za