Eskom tariffs: ‘We don’t want to disincentivise living off the grid’

Eskom says the intent of the proposed fixed cost for an Eskom connection is not meant to disincentivise living off the grid.

It said it needed to update its tariffs to reflect the different services provided, and because Eskom was unbundling, it was “vital that tariffs charges correctly reflect the unbundled cost of these different services to avoid volume and trading risk”.

This follows the revelation of Eskom’s proposed tariff increase of 32.66% for 2023/24 to the National Energy Regulator of SA (Nersa). After a public consultation process, the regulator will then make a decision on which electricity tariffs to approve.

Eskom GM of regulation Hasha Tlhotlhalemaje said it was difficult to give the final cost for homeowners because the tariff would only be announced by December 24.

In a response to questions on Wednesday, the power utility said to ensure adequate recovery of costs, there needs to be an evolution in the thinking of how fixed costs can be recovered in tariffs. 

“The intent of the fixed cost for an Eskom connection is not to disincentivise the use of solar power at all. It is important to realise the value of being grid-connected and to pay a fair unsubsidised contribution for the use of the grid (network capacity) and the system  generation capacity.”

Eskom said this approach had already been introduced for larger and commercial customers and “Eskom is correcting the current residential tariffs for suburban and higher consumption residential customers (home power) to unbundle the tariffs to reflect the costs”.

The grid and system provide backup, provide standby capacity when needed, and provide the ability to receive compensation for energy exported, said the power utility.

Eskom said it intends to introduce a time-of-use residential tariff system which, if used together with PV [photovoltaic or solar panels] and batteries, could enable customer to save costs. 

“If approved by the regulator, the tariff will also provide the option for Eskom to compensate customers who export onto the grid. In other words, Eskom would be able to credit such customers for electricity fed into the grid.”

Eskom said the unbundling process it is going through requires it to update its tariffs to reflect the different services provided, so that energy charges will reflect energy costs, network charges reflect network costs and service charges reflect the cost of administration. 

“Each of these costs have different cost drivers, namely capacity (fixed cost to provide the capacity from a generation and network perspective), energy (to reflect the variable cost of generation) and size of customer (to reflect the cost of administration, based on the different levels of service provided).

Eskom said it was vital that in the process of unbundling, the tariff charges correctly reflected what the different unbundled services were costing consumers “to reflect cost drivers more accurately ensure tariff charges cater for the unbundling”.

TimesLIVE

Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.