Big Eskom tariff changes for South Africa

National energy regulator Nersa has approved structural changes to Eskom’s tariffs under the utility’s new Retail Tariff Plan (RTP).

The changes will see electricity bills for low to moderate home users increase due to higher fixed charges, while average and above-average users should be paying slightly less.

Under the new structure, Eskom will apply new time-of-use charges, fixed capacity, network and service charges.

This will also see the introduction of new cost-reflective tariffs for Eskom’s Homepower and Homeflex services, the consolidation of multiple municipal tariffs, and the removal of the inclining block tariff.

The changes will be implemented in the 2025/26 financial year.

The time-of-use charges will be used to better balance costs around peak times, especially in the morning and the evenings when demand is highest.

This will introduce higher charges for electricity use, based on season and time. The peak-to-standard ratio will be 1:6.

• High-season morning demand will be two hours from 06h00 to 08h00, and the evening peak will be three hours from 17h00 to 20h00.
• Low-season morning demand will be two hours from 07h00 to 09h00, and the evening peak will be three hours from 18h00 to 21h00.
• The introduction of standard hours on a Sunday evening will change from 17h00 to 19h00.

Controversially, the regulator has okayed changes to fixed charges on electricity bills, with the caveat that they are introduced over three years.

It approved the introduction of a fixed Generation Capacity Charge “in principle”, but reduced its allocation to 20% of its current level in year 1, and 30% of the proposed levels in year 2 and year 3.

It also approved the separation of the legacy charge to cover costs from legacy contracts with independent power producers (IPPs).

Network charges will be split into fixed and variable components as proposed, while service charges will be converted to reflect the number of points of deliveries rather than accounts.

“This will reflect the true costs incurred, thus ensuring equity and fairness among users while encouraging efficient resource allocation, Nersa said.

A big change for those who are wheeling electricity is that the affordability subsidy credit for customers wheeling energy will be removed “so that all customers contribute fairly to inter-tariff subsidies”.

Nersa also approved an amendment of the current loss factors applicable to Transmission-connected generators.

“Currently, in certain Transmission zones, the loss factors are negative, effectively meaning that Eskom could pay a generator for being in this specific zone,” Nersa said.

How Eskom customers will be affected

The above changes will impact households, municipal customers and large power users in distinct ways.

The unbundling of energy charges, in particular, will see a new change in bills, which will increase every year.

“The introduction of a fixed generation capacity charge will have a minimal immediate impact. However, it is expected to rise in subsequent years at a rate not exceeding inflation,” Nersa said.

The additional legacy charge for costs associated with contracts with independent power producers (IPPs) promotes transparency and does not introduce additional or new costs.

Here’s how other customers will be impacted:

Households

The introduction of a cost-reflective network and retail charges will lead to a phased adjustment over three years.

The removal of the Inclining Block Tariff (IBT) structure for Homepower and Homelight tariffs simplifies the pricing model and will benefit low-consuming customers, Nersa said.

Transitioning to a single energy rate structure will enhance affordability for many households and promote a clearer understanding of energy costs.

Municipal customers

Nersa said consolidating multiple municipal tariffs into three categories (Municflex, Municrate, and Public Lighting) will reduce complexity and aid in better forecasting.

“Some municipal customers will experience lower average monthly bills, while others will experience increases based on their consumption profiles,” it said.

Large power users (LPU)

The shift to base service charges on the number of points of delivery rather than per account aims to create equity and fairness among users, Nersa said.

However, customers with multiple PODs linked to a single account may see an overall increase in their
rates.