Prepaid electricity service charge crisis
Minister of Electricity and Energy Kgosientso Ramokgopa has highlighted concern over the issue of the government’s free electricity grant support offered to municipalities for the purpose of assisting indigent households.
Unfortunately, the free electricity grant never reaches the intended recipients. Ramokgopa said 10 million South African households qualified for the indigent limited free electricity grant but only 2 million receive the grant.
That means municipalities have been illegally stealing revenue from households.
Over the past couple of months, municipalities have been artificially hiking electricity tariff rates to unreasonable levels.
The latest attempt was implemented more than a month ago when the City of Joburg (CoJ), under City Power, hiked prepaid rates by introducing a surcharge of R200, calling it a domestic capacity or service charge for every monthly recharge.
This has caused outrage among households, angered a lot of ratepayers and pushed households into a corner.
After the backlash, the CoJ promised to halt the introduction of the R200 prepaid electricity surcharge.
But, seemingly, the city and City Power have reneged on their promise and have implemented it.
Now, households are being unfairly charged the R200 on their recharge bill.
What makes the electricity prepaid problem more complex is that none of the surcharges levied and added to the prepaid tariff have been approved by the National Energy Regulator of South Africa’s (Nersa) generation- or distribution-related costs.
The added costs are sheer profits levied on electricity prepaid consumers for the municipalities and, in particular, City Power to get money for jam.
To be honest, it is an abuse of power by municipalities who are creating unnecessary exorbitant costs towards electricity consumers. A R200 service charge takes away 56kWh units at a time from a prepaid electricity recharge; it robs and deprives households of their legally deserved units.
The other problem arises from the fact that Nersa, on the one hand, regulates how Eskom can charge and recover its tariff cost from electricity end-users. But, on the other hand, the tariff set by Nersa is not the same tariff municipalities charge household consumers of prepaid electricity. One could ask: What is Nersa’s role because, as a regulatory body, it is failing to properly enforce and monitor in real time what municipalities and prepaid recharge distributors are charging consumers for the purchase of prepaid electricity. This is exacerbating the crisis of energy affordability within households.
Over the past few months, I have been closely monitoring how municipalities are abusing consumers by charging and levying exorbitant costs on prepaid electricity.
It is a blatant shame that municipalities are unfairly and unashamedly ripping off prepaid household consumers.
As a result, the cost of electricity tariff by kWh (unit) has ballooned so excessively that households can no longer afford it. The situation is worse for indigent households. Imagine paying between R3.54 up to R4.00 per kWh unit of electricity. How is that fair to end-users in such a hard economic situation in South Africa?
In his energy action plan update on Monday, Ramokgopa said the department was working with other roleplayers on an electricity pricing policy to ensure affordability.
This was an update that the minister gave on the energy and electricity issues.
Well, while South Africans are enjoying a much-deserved continuation of 140 days reprieve from load shedding, many townships and communities are suffering and being hit with load reduction regularly.
The minister highlighted the issue of the electricity affordability crisis, which he said was undermining electricity access and increasing the cost of living for households.
He emphasised that his department would work on a policy that would see greater co-ordination and consultation with consumers on electricity access, pricing, tariffs and infrastructure.
The minister said the rising electricity affordability crisis was undermining efforts towards energy security.
“Even in those areas, where you don’t experience load reduction, electricity is just unaffordable. It has gone through the roof, with over 400% increase in the past 10 years. It’s unsustainable. That situation is untenable.
“We have to arrest the situation and that’s why I kept saying we will start a conversation and a process of electricity pricing policy because the tariff is a function (of) policy. So, the problem can’t be Nersa. Nersa is discharging what the policy says. We must resolve the policy question,” said Ramokgopa.
He must also ensure that Nersa plays its role in monitoring and enforcing rules and regulations to ensure that municipalities abide by regulations on the pricing of electricity in order to avoid the triple taxation and rent-seeking model implemented by municipalities on prepaid electricity. Municipalities are milking prepaid household consumers dry.
Also in his energy action plan update, the minister said consultations had started with the South African Local Government Association as part of the broader work to formulate an effective electricity pricing policy. That was to balance affordability and cost-reflective pricing.
“This electricity pricing policy must agitate communities to come on board so that they are able to share their lived experiences. I don’t expect people from my village, Ga-Ramokgopa, or someone from an informal settlement to make a 30-page submission on what is happening, but they must be listened to so that we give credibility to this process,” he said.
South Africa has seen 138 days without rolling blackouts. Energy Crisis – “138 days without load shedding, we have done exceptionally well,” Ramokgopa said.
It is now 140 days since load shedding was suspended. At this rate, there are clear indications that load shedding will be a phenomena of the sixth administration. By December, load shedding would have ended. Now that the power cuts and constant blackouts have disappeared into thin air, South Africa is celebrating a new normal of waking up and going to sleep with guaranteed electricity.
Unlike in the past few months, when days and nights were equally dark due to the senseless load-shedding crisis. Although the absence of a secure constant and reliable electricity in the past months and previous years caused such devastating effects on the economy, livelihoods and overall psychological frustrations in South Africa.
The phenomena of load shedding has had such a devastating knock-on effect in the whole of South African economy and all productive sectors. In the past few years, load shedding caused huge job losses, business closures and industrial productivity losses.
Now, the pricing of electricity is causing an equal, if not worse, energy-affordability crisis, despite the fact that Eskom is producing surplus electricity due to improved maintenance and repairs and refurbishment, according to Eskom's generation recovery plan.
The runaway costs associated with prepaid electricity cost almost double that allowed by Nersa as an allowed recoverable tariff from energy consumers. Overall, infrastructure vandalism, illegal connections and prepaid meter roll-outs remain some of the challenges.
Deputy Electricity Minister Samantha Graham-Mare has said that the department continues to work with Eskom and municipalities to expedite the roll out of prepaid electricity meters.
Even though the newly reconfigured Electricity and Energy department is hard at work to assist in reducing the levels of electricity theft, illegal connections and infrastructure vandalism, more work needs to be done by the department in confronting municipalities to stop overcharging and reduce the charges levied on prepaid electricity.
Municipalities are stealing revenue from ratepayers and prepaid users. Imagine municipalities unfairly charging say R100 from 10 million prepaid meters a month; it amounts to a billion rand a month of theft from prepaid users. The rates per prepaid charge differ; some estates' electricity tariff charges are higher with added costs. The prepaid electricity voucher system is a feeding trough for both distributors and municipalities while stealing from consumers. The government, NERSA and Eskom sit by doing nothing to stop the daylight robbery and exploitation of households' electricity while billions are stolen from ratepayers and prepaid electricity users. It is a crime when a person steals from the state but when the state steals from its citizens it is an administrative error and system problems.
Crown Prince Adil Nchabeleng is president of Transform RSA and an independent energy expert.
* The views in this column are independent of Business Report and Independent Media.
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