‘Homeowners could spend 60% more on electricity this winter’

Alumo Energy warns that homeowners could be paying some 60% more on their electricity bill this winter as a result of the triple threat of winter tariffs, the introduction of the new Eskom electricity tariffs for 2024/ 2025, and a sharp rise in energy usage during the chilly months.

According to Alumo Energy’s managing director Rein Snoeck Henkemans, while the municipal tariff increase is technically set to increase by 12.72% in July, following an 18.65% increase last year, the situation is even direr for household bills than many realise.

“Notably, municipalities typically impose higher winter tariffs than regular summer tariffs during the three months from June to August, coinciding with the upcoming annual hike. The exact increase varies between municipalities but can reach close to 20%.

“Then, to show how much the average household’s costs could increase in the coming months, Alumo Energy conducted a case study measuring households’ consumption changes over the past year and found that, on average, people used some 23% more electricity during the winter. However, some households’ consumption rose by as much as 87%.

“Household energy use naturally increases during the winter as families spend more time indoors, run heaters for long periods, and as geysers work overtime to heat the colder water coming in,” he explained.

“This means that not only will homeowners be paying more for each unit of electricity following the winter increase and the annual tariff hike, but the rise in consumption will place even more pressure on budgets and could place them in a higher tariff bracket, making each unit substantially more expensive.”

To demonstrate the combined impact of this, Alumo crunched the numbers for two examples based on households in Johannesburg.

In the first example, Henkemans said the household’s consumption rises by 23% from 813kWh in May to 1 000kWh in June as winter sets in. This, combined with the winter rate increase, results in an immediate surge in monthly electricity bills from R1 650 to R2 430 – a leap of R780. Next, after the annual tariff hike kicks in from the beginning of July, this household would pay an additional R310 per month, driving their winter electricity bills to over R2 740 – a total rise of nearly R1 100 or 66.2% from May.

In the second example, Henkemans added the household utilises 2,700kWh of electricity during the summer months, which likewise increases by 23% during winter to 3 321 kWh.

This surge in consumption further pushes them from tariff block 4 to tariff block 5, which carries a higher price levy. The combination of a higher price bracket, higher demand and winter rates immediately translates into a higher electricity bill, escalating from R6 220 in May to R9 000 in June – a jump of R2 780.

In July, following the annual tariff increase, this household would then see their monthly bill rise to R10 140. This represents a total increase of more than R3 920 per month or 63.1% from May.

“Critically, it’s important to emphasise that these figures are fairly conservative, as some households could see their bills more than double during colder months after the new tariffs kick in and demand soars,” he added.

He concluded by saying these sharp price increases and the looming instability of the grid may help explain why so many South Africans are now switching to solar.