Home South African Eskom’s proposed retail tariff plan set for public consultation

Eskom’s proposed retail tariff plan set for public consultation

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The proposed changes are designed to restructure existing tariffs to avoid unintended subsidies.

‘Eskom will not generate additional revenue from the proposed tariff restructuring but will rebalance the charges while remaining within the 2024/25 costs already approved by NERSA,’ Bala clarified. Picture: Armand Hough / Independent Newspapers.

THE National Energy Regulator of South Africa (Nersa) has initiated a public consultation process for Eskom’s proposed Retail Tariff Plan, introducing significant changes aimed at ensuring customers pay only for the electricity costs they incur.

This move responds to the evolving landscape of the electricity supply industry and prioritises affordability, fairness, and transparency for all consumers.

In a statement on Friday, Eskom Group executive for distribution Monde Bala emphasised the importance of broad stakeholder engagement.

“The electricity supply industry is undergoing fundamental changes that will set the course for economic growth and prosperity in the years ahead,” Bala said.

“It is therefore vital that as many stakeholders as possible engage with Nersa on the proposed changes to support the determination of tariffs that are as fair as possible for all customers.”

The proposed changes are designed to restructure existing tariffs to avoid unintended subsidies, ensuring that the tariff restructuring process operates independently from Eskom’s current revenue application for the 2025 to 2028 period, which falls under the Multi-Year Price Determination 6 (MYPD 6) process.

“Eskom will not generate additional revenue from the proposed tariff restructuring but will rebalance the charges while remaining within the 2024/25 costs already approved by NERSA,” Bala clarified.

This latest application follows earlier submissions made in 2020 and 2022, with limited approval of previous changes except for the introduction of the Homeflex tariff catering to solar photovoltaic customers.

Now, major structural changes are on the table, representing a significant restructuring of existing tariffs:

  • Households currently on prepaid and post-paid systems will benefit from the removal of the inclining block tariff (IBT), which has imposed higher costs on those using more electricity. This adjustment will mean that low-usage households pay a consistent price regardless of their monthly electricity consumption, fostering greater access to energy services.
  • Grid-connected solar rooftop users who rely on Eskom’s network as backup during periods of low solar generation will continue to incur charges for this service.
  • Excess energy generated by customers with solar technology can still contribute to reducing their electricity bills through energy credits.
  • Municipal distributors purchasing electricity in bulk are expected to benefit from reduced costs, owing to lower subsidy contributions and a streamlined tariff structure that consolidates their current rates.
  • Large industrial and mining customers will see reductions in fixed charges and winter energy time-of-use prices, paving the way for more equitable pricing structures based on actual usage.

The proposed tariff amendments will not affect those who have completely disconnected from Eskom’s grid.

Furthermore, unbundled tariffs are expected to allow for the recovery of Nersa-approved costs by aligning tariff rates with actual service expenses while avoiding unfair cross-subsidies.

This consultation represents a crucial step towards fully unbundled tariffs, where separate charges will apply for electricity capacity usage and network services. This initiative aims to reflect the underlying costs of providing electricity while enhancing transparency for consumers.

Members of the public are encouraged to review the Retail Tariff Plan and utilize the customer impact tool available on the Eskom website at www.eskom.co.zatariffs.

For those wishing to contribute to the consultation, details are available on the NERSA website at https://www.nersa.org.za/electricity-overview/electricity-consultation/.

Public hearings are urged to explore the proposed tariff structure, where representatives from Eskom will address all questions.

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