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Warning about next month’s big electricity price increases BY
Most poor households served by City Power, the municipal electricity distributor for the City of Johannesburg, are in for a nasty surprise, with massive cost increases from 1 July 2024.
This is if the National Energy Regulator of South Africa (NERSA) approves the new electricity prices City Power applied for.
On average, typical indigent households – the poorest of the poor in Johannesburg—use about 200 kWh of electricity per month.
From 1 July 2024, these households are facing an increase of some 60% for this very low amount of electricity.
Poor households using 300 kWh of electricity per month are facing an increase of 45%.
This is because of major structural changes in prepayment meter electricity tariffs and tariff rates approved by the Council of the Johannesburg Metropolitan Municipality.
The prepayment meter electricity tariff changes were submitted to NERSA for approval for implementation from 1 July 2024.
The biggest impact is on its Residential Prepaid High tariff, which applies to most indigent and poor customers with prepayment electricity meters.
In addition to the 12.5% price increase on its variable energy tariff rates for the 2024/25 financial year, City Power has applied for an additional R230 fixed cost per month.
The Residential Prepaid Low tariff applies to households in areas served by City Power that are currently formally registered as indigent.
The Residential Prepaid High tariff applies to all other households with residential single-phase prepayment meters in areas served by City Power.
City Power’s prepayment meter tariffs and tariff rates for the 2023/24 financial year, and those before the Regulator for approval for the 2024/25 financial year, are shown below.
Tariff 1: Residential Prepaid Low Variable costs (R/kWh including VAT) From 1 July 2023 From 1 July 2024 Block 1 (0 – 350 kWh) R2.41 R2.55 Block 2 (350 – 500 kWh) R2.77 R3.12 Block 3 (> 500 kWh) R3.15 R3.75 Tariff 2: Residential Prepaid High Variable costs (R/kWh including VAT) From 1 July 2023 From 1 July 2024 Block 1 (0 – 350 kWh) R2.41 R2.72 Block 2 (350 – 500 kWh) R2.77 R3.12 Block 3 (> 500 kWh) R3.15 R3.55 Fixed costs (R/month including VAT) From 1 July 2023 From 1 July 2024 Service charge R0.00 R80.05 Capacity charge R0.00 R149.50 According to the equitable share grant from the National Treasury to the City of Johannesburg for free basic electricity, about 950,000 indigent households in the City of Johannesburg metropolitan area should receive free basic electricity.
The City of Johannesburg’s own data shows that about 670,000 households live below the lower-bound poverty line.
However, self-reported data by the City in the annual StatsSA non-financial census of municipalities further indicates that just under 30,000 indigent households are on the Indigent Register to receive free basic electricity.
This means that 95 to 97% of all indigent households in the Johannesburg metropolitan municipal area are not on the Indigent Register of the City.
Therefore, the Residential Prepaid High tariff applies, while only 3% to 5% of all indigent households qualify for the Residential Prepaid Low tariff and free basic electricity.
A typical indigent household with a prepayment meter not on the Indigent Register is estimated to use about 200 kWh per month.
From the tables above, in 2023/24, this would have cost them 200 x R2.41 = R482 per month, including VAT.
In 2024/25, this would cost them (200 x R2.72) + R80.50 + R149.50 = R774. This is a 60% increase in one year.
In 2022/23, a typical poor household with a prepayment meter using 300 kWh per month would have spent 300 x R2.41 = R723 per month, including VAT.
In 2024/25, this would cost them (300 x R2.72) + R80.05 + R149.5 = R1046 per month, a 45% increase in one year.
Consider a typical indigent household not on the Indigent Register and previously spent, say, R500 per month on electricity. They would have received 500 / R2.41 = 207 kWh of electricity.
From 1 July 2024, when the same typical indigent household goes to the prepaid electricity vendor with R500, it will now only get (500 – 230) / R2.72 = 99 kWh of electricity.
This means that 95 to 97% of indigent households will, on average, get less than half the electricity per month in the 2024/25 financial year compared to what they were previously getting for the same R500 per month the year before.
Between 640,000 and 920,000 indigent households in the Johannesburg Metropolitan Municipality served by City Power are in for a big shock if NERSA approves the City’s new prepayment electricity tariffs.
By Chris Yelland from EE Business Intelligence. Republished with permission.
SOURCE:Warning about next month’s big electricity price increases – Daily Investor
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