The government is considering measures to reduce electricity costs for businesses and consumers, including proposals to prevent customers from carrying the financial burden of technical failures and non-payment by municipalities and Eskom customers.
Electricity and Energy Minister Sputla Ramokgopa says the government is reviewing the electricity pricing system to ensure that consumers are not unfairly charged for costs that arise from inefficiencies within the electricity supply chain.
Briefing the media in Pretoria, Ramokgopa said bringing energy costs under control was important for households and businesses, particularly as electricity remains a significant input cost for the economy.
He said some costs currently included in electricity tariffs were being passed on to consumers through no fault of their own.
“What we mean is that, under the current arrangement or practice, when municipalities and Eskom fail to collect, that failure to collect is priced into the tariff. In the current tariff, there is a one percentage point to 1.5 percentage point component to account for municipalities not paying. So we say no, it’s not acceptable that you burden the same people who are paying,” said Ramokgopa.
Businesses and paying customers carry the cost
Ramokgopa said the current system can result in customers who pay their electricity bills effectively carrying part of the cost associated with those who do not.
He said Eskom has mechanisms that allow losses resulting from non-payment to be reflected in tariffs, meaning compliant customers can ultimately face higher electricity costs.
“So they are paying diligently and, because you can’t collect from those who are not paying, you also increase the tariff that includes a component of those that are not paying. So you need that assertion,” the Minister said.
For businesses, electricity costs can have a direct impact on operating expenses, particularly for energy-intensive sectors. Government’s review of electricity pricing could therefore have implications for companies seeking greater certainty and affordability in their energy costs.
Government considers changes to electricity pricing
The Electricity Pricing Policy is currently out for public comment, with the government urging businesses, consumers and other stakeholders to participate in the process.
Ramokgopa said the pricing framework should distinguish between costs that consumers legitimately incur and losses resulting from failures by electricity providers or municipalities.
He argued that technical losses should not simply be transferred to customers through higher tariffs.
“We also make the point that you can’t burden the consumer as a result of technical inefficiencies. What we see now in the system, with Eskom and municipalities where there are technical losses, is that they are burdening the consumer, when in fact you should be redirecting money to fix the infrastructure,” said Ramokgopa.
He said the government was considering setting a limit on the extent to which technical losses could be recovered from consumers through electricity tariffs.
“So we determine a ceiling above which you are not supposed to place those technical losses at the door of the consumer,” said Ramokgopa.