With new electricity rates in place and with the prospect of more in the next couple of years, with load shedding always on the horizon, now is a perfect time for consumers to improve their knowledge of how electricity costs work, and how they can save energy and money.
Making sense of SA’s electricity costs. To start, don’t buy prepaid in bulk
As many South Africans have been working from home over the last three to five months, they’re set to be in for a shock when their electricity bill arrives. Eskom direct customers have been paying 8.76% more for their electricity since 1 April 2020, while municipal customers have been paying an additional 6.9% since 1 July 2020.
Understanding how electricity tariffs work
However, until that happens, understanding how electricity tariffs work is the first step towards taking charge of your spending.
“The price of municipal electricity is about to increase, and consumers are going to be hit hard. Understanding how electricity tariffs work is the first step towards taking charge of your spending,” says Citiq Prepaid managing director, Michael Franze.
“Unfortunately, the exact details of how any particular electricity bill is calculated can be so complex it’s difficult for even experts to understand. At Citiq Prepaid we do some very complex calculations to make sure we’re charging every user the right tariff, no matter where they are or when or how much electricity they are charged. Our goal is to make things fair and transparent for everyone. We help landlords collect what they owe to the municipality or Eskom, not to make a profit on the selling of electricity.”
In the long term, Franze says the real solution is for Eskom, municipalities, and the National Energy Regulator to design simpler consumer tariffs. But in the meantime, there are three basic pieces of information that can help consumers to make sense of their electricity bills.
“Firstly, your charges will vary depending on where you live. If you get your power directly from Eskom, which is the case in many rural areas and in Soweto, for example, you will be charged according to a different system than if you get your electricity from a municipality. And each municipality has its own system as well,” he says.
Secondly, Franze says it’s helpful to understand the incline block tariff (IBT) system. “Basically, this means that the more electricity you buy in a month, the more you pay. In the case of prepaid customers, it has nothing to do with how much you actually use – the cost is purely based on how much you buy. This means that electricity is one of the rare cases where it’s really not a good idea to buy in bulk. Rather buy from week to week, or buy just enough at the beginning of each month to keep you going. It’s cheaper to top up with a few units at the end of each month than to buy enough to last you for two months.”
Thirdly, consumers should understand exactly what they’re getting when they buy a unit of electricity. “The terms can get confusing, but when you break it down it’s actually quite simple,” says Franze.