A new research report highlights the impact SA power utility Eskom’s tariff structures and tariff increases has had on typical South African households.
Thembie Chehore, research associate for energy & environment at growth consulting firm Frost & Sullivan Africa, said that Eskom has been under scrutiny for a number of reasons mostly relating to load-shedding and high levels of inefficiency.
Constant tariff increases under the multiyear price determination (MYPD) programme is another major source of discontent towards the utility, Chehore said.
According to F&S, part of Eskom’s justification for its price hikes has also rested on the claim that historically South Africa has had some of the lowest tariffs in the world.
The tariff increases have grown from a modest rate of 5.1% in 2006/7 to a peak of 31.3% in 2009/10.
A comparison of average electricity tariffs in 2011 using information obtained from the Organisation for Economic Co-operation and Development (OECD), and past Frost & Sullivan analysis, proves this claim to be true.
Frost & Sullivan further identified that South African tariffs are comparatively low, not only in the industrial sector, but in the residential sector as well.
The advisory firm also compared the current residential tariffs in select African countries as of June 2014.
It noted that given Eskom’s assertion that the average monthly household consumption is 500-750 kWh, this analysis was based on a monthly residential consumption of 500 kWh.
SA’s electrification rate of 85.3% (as of 2013) is higher than those of the world, developing world and Sub-Saharan Africa at 80.5%, 74.7% and 30.5% respectively.
F&S said that the country’s power utility has made phenomenal progress in connecting South African households to the grid; between 1994 and 2014, the utility was able to connect 5.7 million households.
However, it was unable to achieve the goal of universal electrification by 2014. As of the 2011 census, 3.3 million households were yet to be connected.