Eskom price hikes tear through South African households

South Africa’s most vulnerable households are bearing the brunt of power utility Eskom’s electricity price hikes which filtered through to the masses in July via municipal tariff hikes.

Eskom hiked tariffs for direct customers by 18.65% in April 2023, with municipalities hiking by similar rates to their customers from 1 July.

According to the latest Household Affordability Index published by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD), the tariff hikes have eaten away at what little disposable income households have.

Given the scale of the tariff hikes, the PMBEJD said that almost a third (32%) of the 2023 national minimum wage increase was completely wiped out, leaving minimum wage earners having to choose between power and food.

The PMBEJD noted that the annual increase in the National Minimum wage was R2.23 per hour – up 9.6%. However, when taking the electricity tariff hike of 15% into account, this was, in effect, reduced to R1.52 per hour.

To illustrate this, the group showed that the 2023 NMW increase, on a 21-working days payment, totalled R374.64.

The annual electricity tariff increase, which came into effect now on the 1st of July 2023 (and based on Pietermaritzburg figures of 15.1%), increased a workers’ electricity expense by R119.00, with 350kWh costing R906.92 from R787.92 previously.

The new electricity tariff has thus effectively removed R119.00 (31.8%) from the R374.64 increment in July, eroding a 9.6% NMW increment to 6.6%. This would have been even worse for cities and municipalities where the rate hikes were higher.

“Annual electricity tariff hikes continue to be an extraordinary threat to annual NMW increases – this year, the Eskom tariff hike has eroded nearly a third off the annual NMW increase.

“It is a significant depletion off the wages of millions of our lowest paid workers, whose wages are already insufficient to secure the very basics of life’s needs,” the group said.

The problem is only made worse with higher levels of consumption, with the group noting the 350kWh example reflects a “very humble” figure.

But even given this example, the PMBEJD said that, in July, electricity costs would have taken up just over a fifth (21.2%) of the monthly wage (~R4,270), leaving very little for food, transport and all the other essentials South African households need.

“All our staple foods need to be cooked; we need energy to keep warm and clean, to keep our lights on, for our appliances, and for security – electricity payments are a non-negotiable expense. The higher electricity tariffs remove even more food off the plates of hardworking South Africans and their children,” the group said.

Adding to household pain, the group’s healthy food basket also saw another cost jump, with the 44 food items it contains now amounting to R5,081.94 – up 7% from July 2022. The essential food basket – of priority foods needed to survive – also increased by 8.1% to R2,796.83.

The group said that food is often bought after monies for transport and electricity have been paid for or set aside. After electricity and transport, this leaves only R1,850 to be spent on food and everything else, it noted.

“In July 2023, PMBEJD calculates that workers’ families will underspend on food by a minimum of 47.5%. In this scenario, there is no possibility of a worker being able to afford enough nutritious food for her family,” it said.

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