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Notification of 2013/2014 tariff increase

On 28 February 2013, the National Energy Regulator of South Africa (Nersa) announced that Eskom�s electricity tariffs will increase by an annual average of 8% for 2013/14. This permits Eskom to recover R135 226 million from sales of 206 412 GWh for 2013/14.

The tariff increase will be implemented on 1 April 2013 for Eskom residential, commercial and industrial customers and on 1 July 2013 for municipal customers. 

It is important to note that certain customer categories may see a variance from the average 8% tariff increase. This is mainly attributable to volume variances relating to tariffs with demand and fixed charges.

1. Information on Residential Tariff:
In the continued effort to protect the poor against high price increases, Nersa has reduced the electricity tariff for low consumption residential customers on inclining block tariffs (IBT). (Homelight 20A and 60A).

The following decisions were made with regard to Eskom�s Residential Tariff structure:

a) Homelight 20A will change from a four block IBT structure to two blocks. 

  • Block 1: 0-350 kWh and block 2 > 350 kWh.

b) Homelight 60A will change from a four block IBT structure to two blocks. 

  • Block 1: 0-600 kWh and block 2 > 600 kWh.

c) Homepower tariffs will change from four block IBT structure to a tariff with a fixed network charge and energy recovered through two blocks.

  • Block 1 0-600 kWh and block 2 > 600 kWh.

d) Revision of the Homepower Bulk structure.

In addition, Nersa has approved the following:

e) Transparent calculation of subsidies against costs.

f)  Unbundling of the low voltage subsidy for the Large Power User (LPU) tariffs

g) Unbundling of the affordability subsidy for the LPU urban tariffs

h) Unbundling of the reliability service charge previously included in the energy charges.  This impacts all tariffs except for residential and public lighting.

i)  The submission of use-of-system charges for Distribution and Transmission connected generators and loads, on which the tariff charges are determined.

j)  All energy rates, except for residential and public lighting recalculated determined on a purchase price 1:8 Time of Use (TOU) ratio.

k) Embedding of the environmental levy in the energy rates for all tariffs.

2. Overview of the  increases per tariff

The following table shows the average increase per tariff after including volumes changes, all the structural changes, the price increase and the contribution or receipt of subsidies.

Table 1: Summary of price increase per tariff category 2013/14 

Eskom tariff increase categories

Eskom average annual increase
1 April 2013 - 30 March 2014

Municipality increase
1 July 2013 � 30 June 2013

Munic Urban

7.1%

6.0%

Munic Rural

12.0%

11.2%

Munic Total

7.3%

6.1%

Non-munic Urban

9.6%

Non-munic Rural

9.3%

 

Non-munic Homelight 20A

-0.4%

 

Non-munic Homelight 60A

4.2%

 

Non-munic Homepower

7.3%

 

Total

8.4%

 

If the impact is greater or lower than 8% then this is due to volume or the average load profile of particular tariffs.

2.1 Local authority tariff increase

With reference to Table 1 note the following;

  • The local authority increases comprise 2 sets of rates.  One set applicable for July 2012 to June 2013 at the 2012/13 rates and another set that is the proposed 2013/14 tariffs from 1 July 2013.
  • Therefore the average price increases for Apr to June reflect a comparison of 2012/13 rates to the 2011/12 rates.
  • The July to March average price comparison reflects the submitted rates for 2013/14 compares to 2012/13 for only the 9 months
  • All municipalities will see for the 2013/14 Eskom financial year (1 April 2013 � 30 March 2014) an average increase of 7.3%.  This compromises rates from 1 April 2013 - 30June 2013 at the current rates which includes the previous year�s 16% increase.
  • The average increase applicable on 1 July to municipality tariffs will be 6.1% - from 1 July 2013 to 30 June 2014.  This is the average increase that municipalities will see 1 July.

2.2 Non-local authority tariff increase

With reference to Table 1 note the following; the urban non-local authority tariffs see a slightly higher increase than the average increase due to the lower increases to the residential tariffs, now covered by the affordability subsidy.

2.3 Residential tariffs' impact

With reference to Table 1 note the following:

  • Homelight 20A sees an overall average price reduction after the price increase.  This was due to the average price including revenues from consumption of the higher block rates, while the price for block 1 was based on the average customer and not the average price of all customers on Homelight 20A.
  • Homelight 60A sees a lower than average increase. This was due to the average price including revenues from consumption of the higher block rates, while the price for block 1 was based on the average customer and not the average price of all customers on Homelight 20A.
  • All of Homepower rates were calculated to ensure that the average price increase at the average consumption equalled the average increase of 8%. It is to be noted, however, that Homepower 4 high block rate was made equal to the Homelight 60A > 600 kWh rate to ensure that the two tariffs at higher consumption levels have similar average prices. This has meant the average impact for Homepower 4 is 6% and not 8%. Homelight 60A, however, remains cheaper than Homepower 4.

Click here for the Schedule of Standard prices for Local and Non-local authority supplies,applicable 1 July 2013 to 30 June 2014 for Local  authority and 1 April 2013 to 31 March 2014 for Non- local authority.