Big changes for prepaid and solar users in South Africa in Eskom tariff overhaul

The National Energy Regulator of South Africa (NERSA) has published Eskom’s proposed Retail Tariff Plan for public consultation, outlining significant changes to electricity tariff charges and rates.

The proposed changes include removing the inclining block tariff for residential customers, adjusting tariffs for customers with solar panels, and creating new options for municipal distributors and large consumers.

In an official statement, Eskom said that this is to align electricity tariffs with the actual costs of generation, transmission, and distribution services, ensuring that customers only pay for the costs they incur.

“The electricity supply industry is undergoing fundamental changes that will set the course for economic growth and prosperity in the years ahead,” said Group Executive for Distribution, Monde Bala.

“It is therefore vital that as many stakeholders as possible engage with NERSA on the proposed changes to support the determination of tariffs that are as fair as possible for all customers,” he added.

Key Proposals in Eskom’s Retail Tariff Plan

Eskom said that its proposed tariff adjustments aim to restructure existing tariffs “while preventing unintended subsidies.”

The tariff restructuring is separate from Eskom’s ongoing revenue application to NERSA for the 2025-2028 period under the Multi-Year Price Determination (MYPD 6) process.

The utility said that the changes are designed to rebalance tariff charges, with no additional revenue generated beyond the costs already approved by NERSA for the 2024/25 period.

Some of the major proposed changes include:

Removal of the Inclining Block Tariff (IBT):

Eskom is proposing to eliminate the IBT for residential households, which currently results in higher electricity costs for customers who use more power.

This change will see low-usage households pay a consistent price for their electricity, regardless of how frequently they purchase it throughout the month.

Tariffs for Solar Rooftop PV Users:

Customers with solar photovoltaic (PV) systems connected to the grid who use Eskom-supplied electricity as backup during cloudy days or peak times will continue to pay for the use of the Eskom network.

However, those who export excess energy onto the grid will receive energy credits, potentially lowering their electricity bills.

Lower Costs for Municipal Distributors:

Municipal distributors purchasing electricity in bulk will benefit from reduced fixed charges and subsidy contributions.

Eskom plans to consolidate the current 15 tariff options for municipalities into just three, simplifying the pricing structure.

Reduced Charges for Large Industrial and Commercial Users:

Eskom proposes reductions in fixed charges and winter energy prices for large industrial, mining, and commercial customers.

Service charges for large users will be recalculated based on each point of supply to ensure fairness and better reflect the resources required to manage electricity delivery at large sites.

Why?

Eskom said that one of the key objectives of the proposed tariff plan is to ensure that its tariff structure is fully unbundled.

This will separate charges for electricity capacity usage and network services, reflecting the actual costs of providing each service.

By unbundling the tariffs, Eskom said that it aims to avoid unfair cross-subsidies and ensure that customers are only charged for the services they use.

The plan also aims to support the integration of alternative energy sources into the grid, which is seen as crucial for the future stability of South Africa’s electricity supply. Insufficiently unbundled tariffs, according to Eskom, pose revenue risks and unfairly raise tariffs for all customers.

Public Consultation and Engagement

As part of the public consultation process, Eskom is inviting members of the public to review the proposed Retail Tariff Plan and provide feedback.

The Retail Tariff Plan and a customer impact tool can be accessed on Eskom’s official website www.eskom.co.za/tariffs.

Public hearings will also be held, where Eskom will address all questions and concerns related to the proposed tariff structure.

Interested parties are encouraged to participate and contribute to the process to ensure that the final tariff determination is fair, transparent, and aligned with the needs of all customers.

Bala, urged stakeholders to participate in the consultation process to ensure that the revised tariffs are fair and sustainable.

For more information or to participate in the consultation, visit the NERSA website at https://www.nersa.org.za/electricity-overview/electricity-consultation/.

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