Eskom wants to introduce a new ‘time-of-use’ tariff for residential customers

Power utility Eskom has submitted its proposed 2023 Tariff Restructuring Plan to energy regulator Nersa, showing how the group wants to make sweeping changes to its price structures.

Included in the new proposals is a new residential tariff – called Homeflex – “that is more cost-reflective in structure and adaptable to evolving customer needs, changes in technology, and the changing energy environment, thereby providing a benefit to both the customers and Eskom,” the group said.

The proposed tariff restructuring plan is forward-looking and provides signals for further optimal use of the South African electricity system, said Eskom.

“Existing tariff structures are outdated and need to be modernised to reflect the changing electricity environment, and crucial decisions in this regard are needed to protect the electricity industry,” said Eskom Group executive for Distribution, Monde Bala.

“For example, customers are installing their own power generators and are using the grid in different ways, and the wheeling of energy is also expanding. Fair and equitable revenue recovery from all customers for the services provided can only happen with tariffs and tariff structures that are modernised to reflect this changing environment.”

The following are the key objectives of the submission:

• To reflect unbundled costs more accurately;
• To reflect the changing electricity supply and demand environment;
• Alignment between wholesale purchases and retail tariffs and;
• Mitigate volume and revenue risk.

Read more about the document here:

Eskom proposes complete tariff overhaul – including a massive change for prepaid users

Homeflex

The Homeflex tariff, according to Eskom, is a ‘dynamic tariff’ for the residential urban sector that supports a more optimal operation of the power system. Eskom said it has identified the need for a residential time-of-use tariff to provide the right economic signals that promote economic efficiency and sustainability.

The design of the Homeflex tariff is based on the proposed new TOU wholesale purchase tariff ratios plus cost-reflective network, ancillary service and service/administration charges for the residential customer category.

It is then scaled to be revenue-neutral to the existing residential tariff (Homepower) to avoid over- and under-recovery of revenue, Eskom said.

This new tariff would require a post-paid smart meter – to be paid for by customers.

The Homeflex tariff consists of unbundled energy and wires charges, namely:

• A three–part (peak, standard and off–peak) time–differentiated and seasonally differentiated active energy charge, including losses, based on the NMD (size) of the supply;
  
• A R/POD/day network capacity charge based on the NMD (size) of the supply;
  
• A c/kWh network demand charge, based on the active energy measured at the point of delivery (POD);
  
• A c/kWh ancillary service charge based on the active energy measured at the POD;
  
• A R/day service and administration charge for each POD, which charge shall be payable every month whether any electricity is used or not, based on the applicable daily rate and the number of days in the month;
  
• Introducing a fixed generation capacity charge (GCC) at a 50/50 split to limit the impact on the customer in a phased approach, and it is envisaged that the current GCC split phasing in be increased in the future; and
  
• A c/kWh offset rate for customers exporting energy onto the grid under the net billing scheme.

The Homeflex tariff

The Homeflex tariff would be suitable for medium- to high-usage residential urban customers who have the ability to shift load from the expensive peak periods to the less expensive off-peak periods, said Eskom.

It would be made up of a range of tariffs (aligned with home power supply sizes), as follows:

• Homeflex 1: dual-phase 32 kVA three-phase supplies (80 A per phase) three-phase 25 kVA three-phase supplies (40 A per phase)
• Homeflex 2: dual-phase 64 kVA three-phase supplies (150 A per phase) three-phase 50 kVA three-phase supplies (80 A per phase)
• Homeflex 3: dual-phase 100 kVA three-phase supplies (225 A per phase) three-phase 100 kVA three-phase supplies (150 A per phase)
• Homeflex 4: 16 kVA single-phase supplies (80 A per phase)

Proposed Homeflex tariff

Homeflex will be mandatory for all customers with grid–tied small-scale embedded generation, said Eskom. For all other residential urban customers, converting to the Homeflex tariff will be a choice, it said.

The Homeflex tariff also introduces net billing – which will allow self-generating customers to benefit from exporting their excess power to the grid.

“Net billing is a credit mechanism where the customer’s generation is synchronised with the grid, and at times, there may be export an of energy,” Eskom said. “This energy is not purchased by the utility; the energy still belongs to the customer. Depending on the legislation, this customer may or may not be required to apply for a license.”

Eskom said that the structure of this relationship between self-generators and Eskom will evolve over time, but added that there are benefits to keeping ties to the national grid and not completely moving off-grid.

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