Eskom calls for major pricing overhaul: 'Tariff structure is a mess and has been for a long time'

John Maytham interviews Clyde Mallinson, Director at Virtual Energy and Power (VEP).

Listen below.

Eskom has proposed a major overhaul of its electricity pricing system, arguing that the current model is outdated, especially with the increasing adoption of solar panel installations.

The proposal, submitted to the National Energy Regulator of SA (Nersa), aims to eliminate inclining block tariffs, which offer discounted rates for lower electricity consumption. Under this system, consumers receive reduced rates for the first 600 kWh of electricity used.

Taking into consideration that the tariff was initially designed to ensure indigent households could afford their basic electricity needs, Eskom now wants to exclude wealthier households that have installed solar panels and consequently use less electricity from benefiting from this discounted structure.

"That low tariff inclining block was designed to benefit people who are in lower income brackets and most often use less electricity anyway – smaller houses, fewer appliances.

- Clyde Mallinson, Director – Virtual Energy and Power

The new pricing model also introduces time-of-use tariffs, with higher rates during peak periods and lower rates during off-peak times.

The approach is not new as it has already been adopted by municipalities, but Maytham questions if it is truly beneficial for Eskom customers.

Mallinson says that while this type of tariff is designed to drive customer habits, effectively monitoring electricity use in households comes with challenges.

For example, he says that it would require the implementation of sophisticated meters to track usage accurately.

"The whole distribution tariff structure is a mess and it has been for a long time."

- Clyde Mallinson, Director – Virtual Energy and Power 

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