R230 prepaid electricity price shock next month – and more hikes to come

 ·19 Jun 2024

Prepaid electricity users in the City of Joburg are in for a nasty surprise in July 2024 as the city’s approved rate changes kick into effect.

While energy regulator Nersa still needs to approve the city’s proposed 17.9% tariff hike, wide-sweeping structural changes to tariff structures are set to take effect.

This includes the implementation of a R230 service and capacity charge being levied on “normal” (non-indigent) prepaid electricity users, and tariff hikes to bring charges more in line with conventional users.

The initial proposal for 2024 was for this fee to be as high as R550 per month, but the final approved fee brought this down to R230 per month.

This means prepaid users will be paying a surcharge on their bills regardless of how much electricity they actually use in a month.

The city said that this is because, even though prepaid electricity users only consume electricity on-demand, the network still has to ensure that the distribution network has that electricity available.

It is also moving to align prepaid tariffs with conventional tariffs and plans to increase these further in the coming years.

“Compared to residential conventional customers, the prepaid customer contribution to network availability cost is still very inadequate and requires a substantial increase in the next three to five years to fully align with the conventional tariff,” it said.

These prepaid fees and surcharges have long been slapped onto budget proposals in the city and removed each time. This is because it’s often poorer users who are on prepaid meters.

However, the city has attempted to circumvent this by splitting the prepaid users into two groups – low (indigent) and high (regular) users. Low users are not subject to the surcharge and will see lower price increases. This will be subsidised by the regular users.

Major blow to the poor

While the city’s measures to prevent the R230 surcharge from impacting the poor read well on paper, energy expert Chris Yelland said that, in reality, poor households are in deep trouble.

This is because the city’s register of indigent households does not reflect the number of poor in the city.

According to Yelland, the equitable share grant from the National Treasury to the City of Johannesburg for free basic electricity shows there are about 950,000 indigent households in the City of Johannesburg metropolitan area that should be receiving free basic electricity.

“The City of Johannesburg’s own data shows that about 670,000 households live below the lower-bound poverty line.

“However, self-reported data by the city in the annual StatsSA non-financial census of municipalities further indicates that just under 30,000 indigent households are on the Indigent Register to receive free basic electricity,” he said.

This means that around 95% of indigent households that should be exempt from the R230 fee and lower tariff hike will likely be charged the regular rates.

Further to this, Yelland’s calculations show that these households will likely end up paying anywhere between 45% and 65% more for electricity under the new structure.

Read: Joburg complexes, businesses and prepaid electricity users are in deep trouble

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