{"id":833304,"date":"2025-07-29T15:00:55","date_gmt":"2025-07-29T13:00:55","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=833304"},"modified":"2025-07-29T15:01:00","modified_gmt":"2025-07-29T13:01:00","slug":"south-african-households-can-expect-big-changes-to-electricity-prices","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/833304\/south-african-households-can-expect-big-changes-to-electricity-prices\/","title":{"rendered":"South African households can expect big changes to electricity prices"},"content":{"rendered":"\n

The energy department is focusing on how the price of electricity can be lowered in South Africa, and has already tasked the South African National Energy Development Institute (SANEDI) with reviewing the country\u2019s pricing framework.<\/p>\n\n\n\n

At the end of last year, President Cyril Ramaphosa said the government has been working on reforms to help improve the country\u2019s energy security and lower electricity costs.<\/p>\n\n\n\n

Ramaphosa acknowledged that electricity prices at tariff adjustments further strained households and businesses in South Africa. <\/p>\n\n\n\n

Because of this, he said it is vital that we settle on a tariff path that enables Eskom to achieve financial sustainability while not placing an undue burden on electricity consumers.<\/p>\n\n\n\n

Last week, Electricity and Energy Minister Kgosientsho Ramokgopa echoed Ramaphosa\u2019s sentiment and said the cost of electricity in South Africa is unsustainable and is driving many households into energy poverty.<\/p>\n\n\n\n

To fix the issue, Ramokgopa said the department is revising the electricity pricing policy to address the cost of electricity. \u201cIt’s unaffordable,\u201d Ramokgopa said in an interview with broadcaster eNCA over the weekend.<\/p>\n\n\n\n

\u201cI mean, it’s dealing a major blow to the disposable income of households,\u201d he said. He added that for many families, the choice comes down to buying a loaf of bread or replenishing electricity units.<\/p>\n\n\n\n

\u201cThe choice is easy. They are going to buy a loaf of bread,\u201d he said. Ramokgopa reiterated the government’s responsibility to intervene.<\/p>\n\n\n\n

\u201cThe state has got a duty not to be retrenched, but to be at the forefront of the resolution of this preeminent problem,\u201d he said.<\/p>\n\n\n\n

Following Ramokgopa’s concerns about South Africa\u2019s rising electricity prices, the South African National Energy Development Institute (SANEDI) has been tasked with reviewing the country\u2019s electricity pricing framework to reduce costs and improve energy access. <\/p>\n\n\n\n

Professor Sampson Mamphweli, head of the energy secretariat at SANEDI, agreed<\/a> with the minister and the president, noting that South Africa\u2019s historically low electricity prices were a competitive advantage. <\/p>\n\n\n\n

\u201cOur electricity price used to be very low to attract investment and to support industry so that industry can then produce the much-needed jobs,\u201d said Mamphweli. <\/p>\n\n\n\n

However, the low tariffs were not cost-reflective, and what consumers paid was less than the actual cost of generation, largely due to the increasing maintenance costs of the ageing coal fleet.<\/p>\n\n\n\n

\u201cOur pricing framework allows for cost recovery and a minimum allowable profit,\u201d explained Mamphweli. <\/p>\n\n\n\n

\u201cThat minimum allowable profit is the money that Eskom and any other electricity producer uses to maintain their generation, transmission, and distribution systems.\u201d <\/p>\n\n\n\n

Renewables could subsidise cost of coal\u2014bringing costs down<\/h2>\n\n\n
\n
\"\"<\/a>
Prof. Sampson Mamphweli, head of the energy secretariat at SANEDI.<\/em><\/figcaption><\/figure><\/div>\n\n\n

While the government previously bridged the shortfall through equity injections, Eskom has been pushing for cost-reflective tariffs to ensure financial sustainability.<\/p>\n\n\n\n

With load shedding now under relative control, Mamphweli said Minister Ramokgopa is turning his attention to electricity pricing. <\/p>\n\n\n\n

\u201cHe has requested SANEDI, the entity I work for, to look into the pricing framework and other ways to bring the cost of electricity down,\u201d he said. <\/p>\n\n\n\n

The mandate also includes exploring how to extend electricity access to the estimated four to five million households still living without power.<\/p>\n\n\n\n

One area SANEDI may explore is the structure of fixed charges. \u201cIn the City of Johannesburg, they removed the R126 fixed charge that people pay monthly regardless of usage,\u201d Mamphweli said. <\/p>\n\n\n\n

\u201cThat charge mainly goes toward maintaining infrastructure like transformers and transmission lines.\u201d <\/p>\n\n\n\n

\u201cSo while there may be low-hanging fruit, removing such charges creates a funding gap that municipalities have to cover, often by revising budgets or cutting other services.\u201d<\/p>\n\n\n\n

Mamphweli also addressed the cost overruns and delays at Medupi and Kusile power stations, where nearly R400 billion has been spent over 18 years. <\/p>\n\n\n\n

\u201cThere were issues, design flaws and emissions technology problems, but we had to choose between abandoning the projects or completing them,\u201d he said. <\/p>\n\n\n\n

\u201cThey are our newest coal plants and will outlast the older fleet. Their lifespan can exceed 40 years, possibly up to 60, so we\u2019ll eventually see value for money, though it\u2019s deferred.\u201d<\/p>\n\n\n\n

He acknowledged that consumers are now indirectly paying for historic missteps, not just at Medupi and Kusile, but also through the initial costs of South Africa\u2019s renewable energy programme. <\/p>\n\n\n\n

When Independent Power Producers (IPPs) were introduced, the renewable sector was undeveloped, leading to high upfront costs. <\/p>\n\n\n\n

\u201cWe had to pay a premium for renewable energy, and that premium was worked into Eskom\u2019s tariffs,\u201d Mamphweli explained. \u201cIn effect, the lower coal-based tariffs subsidised renewables.\u201d<\/p>\n\n\n\n

However, the situation has now shifted. The renewable energy sector is more mature, and prices have come down. <\/p>\n\n\n\n

Mamphweli said that there\u2019s an opportunity to reverse the subsidy without pre-empting SANEDI\u2019s work, using lower renewable tariffs to offset the higher costs of coal-based generation.<\/p>\n\n\n\n

The review of the pricing framework is still in its early stages, and the minister is expected to announce the details, including specific focus areas and supporting structures, in due course.<\/p>\n","protected":false},"excerpt":{"rendered":"

The energy department is focusing on how the price of electricity can be lowered in South Africa, and has already tasked the South African National Energy Development Institute with reviewing the country\u2019s pricing framework. <\/p>\n","protected":false},"author":92,"featured_media":733715,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[1164,853,23246],"class_list":["post-833304","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-eskom","tag-south-africa","tag-the-south-african-national-energy-development-institute-sanedi"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833304","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=833304"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833304\/revisions"}],"predecessor-version":[{"id":833459,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/833304\/revisions\/833459"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/733715"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=833304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=833304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=833304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}