South Africa’s electricity prices still compare favourably when weighted against some big international markets, but costs are rising at a faster rate.
According the 2013/14 International Electricity and Natural Gar Report and Price Survey, by the NUS Consulting Group, South Africa has the 15th highest average electricity prices, out of 18 countries measured by the group.
Italy, with a cost per kWh of 21.01 US cents, has the highest tariff of the countries surveyed, with Sweden – at 7.87 US cents per kWh – holding the lowest fees.
Both countries, however, saw a reduction in tariffs (of 1.7% and 2.4%, respectively) over the past year.
South Africa, on the other hand, saw the biggest jump in tariffs out of the countries surveyed – 7.5%, to a rate of 8.97 US cents (R0.96*); while Australia saw the biggest drop – over 23% – to 9.71 US cents.
The price survey is based on fixed, 12-month contract prices for the supply of 1,000kW with 450 hours use, expressed in US cents, excluding VAT (% changes were calculated in local currency).
International Electricity Price Table 2014
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According to separate research conducted by advisory firm, Frost & Sullivan, South Africa’s electricity prices also compare favourably in a different selection of countries.
In its research, the group once again found European markets on the upper-spectrum of prices, with South Africa on the lower end, along with other African nations.
South Africa’s power
South Africa’s power market is regulated, and dominated by Eskom, which sells electricity directly and wholesale to municipalities, which then go on to sell to end-users.
A small percentage of power – 3%, according to NUS – also comes through gas, which has seen a 65% drop in cost over the past year, and has also experienced an uptick in demand, due to increasing electricity costs.
“Power outages and rising costs have prompted an increasing trend in self-generation, particularly for the private sector and residences,” NUS said.
The group noted that users have been investing in solar, co-generation and other distributed generation projects in order to to gain greater control over power feeds and minimize the effects of power outages and rising prices.
“This trend, in addition to a slowing economy and the mine strikes have contributed to the overall reduction in power demand,” it said.
Tariffs to climb higher
South African energy regulator, Nersa, recently approved Eskom’s plans to recoup losses after it had under-recovered money during the multi-year-price-determination 2 (MYPD2) control period between 2010 and 2013.
The body approved the regulatory clearing account (RCA) for Eskom, allowing it to recover R7.82 billion in revenue, which would see wholesale tariffs increase by 12.7% in 2015 – up from the previously sanctioned 8% increase.
However, it must be noted that this increase does not include other increases often implemented by resellers, such as municipalities, which often push prices far higher.
Speaking to BusinessTech, NUS warned against using averages and average tariff increases as reported by Nersa to determine true costs and plan forward budgets, as each customer profile would be different.
It is imperative for individual households and businesses to fully investigate and understand their energy billing, in order to make the most effective cost-saving decisions, the group said.
* Exchange rate at the time of survey (2 June 2014) $1 = R10.68