Joburg’s big plan to bring private energy online

 ·30 Jun 2023

The City of Johannesburg is launching a new electricity wheeling system as part of the city’s attempt to update its power supply approach.

Dada Morero, councillor for the Johannesburg Mayoral Committee for Finance, said that the city would introduce new tariffs for key services on 1 July 2023.

The increase in tariffs for key services in 2023/24 are as follows:

  • Electricity: +14.97 %
  • Property Rates: +2%
  • Water: +9.3%
  • Sanitation: +9.3%
  • Refuse: +7%

In an effort to shift away from being an electricity distribution entity to an energy service provider, the city council has approved generator-use-of-system tariffs (wheeling tariffs). Wheeling allows independent power producers to use existing grid infrastructure to supply customers.

“The tariff will be applicable to generators of electricity who may want to service customers embedded within the City Power area of supply but will be charged to their respective end customers,” the city said.

“The tariff will also be applicable to customers who self-generate electricity for use at a location elsewhere on the City Power electricity distribution network.”

It added that third-party generators that want to supply customers via the City Power network must apply for third-party access to the network infrastructure.

Although City Power is compelled to give these third-party private electricity generatorsaccess to the network at a reasonable cost via its wheeling system, they will still be subject to the city’s safety requirements.

Isaac Mangena, Senior Media Relations Manager at City Power, told BusinessTech that City Power will still charge the customer for all electricity supplied; however, it will also credit the customer with the electricity supplied by the third party at Eskom’s Wholesale Electricity Pricing System (WEPS) tariff.

“Allowing customers to source electricity from third parties will displace the current revenue margin on energy (kWhs) sold, while the demand charge is not fully cost-reflective. The network access charges should therefore be proportional to the opportunity cost (as may be discounted) of providing third-party access to the City Power network,” Mangena said.

“It is therefore proposed that City Power charges the customer for all the electricity supplied to the customer and credit the customer with electricity supplied by the third party at the following Eskom WEPS tariff.”

Not the first city

The City of Johannesburg is following in the footsteps of the City of Cape Town in introducing a wheeling program.

Cape Town mayor Geordin Hill-Lewis said that 15 commercial electricity suppliers would start wheeling electricity on the city’s grid this month.

The city said that electricity wheeling is one of the best ways to mitigate the effects of load shedding, with a full-scale wheeling program launching later this year.

“Cape Town’s electricity landscape is rapidly liberalising off the back of our end load-shedding plans, with 700MW of independent power under procurement, innovative Cash for Power and Power Heroes programmes, and now the sale of electricity wheeled between market participants,” Hill-Lewis said.


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