How much Eskom wants to charge for using 0kWh — up to R3,474 for home users
9 November 2022
Eskom’s proposed electricity tariff restructuring will see many residential electricity users paying between three and six times more for a grid connection if they don’t use electricity during the month.
The power utility submitted the tariff plan to the National Energy Regulator of South Africa (Nersa) in August 2022 and gave three primary reasons for the revision.
Firstly, Eskom said tariffs were not aligned with energy, network, and retail costs because of the practice of implementing average price increases each year as part of the Multi-Year Price Determination methodology.
Secondly, the unbundling of Eskom’s various divisions required that the charges become more reflective of the costs per division. This would ensure each entity collects appropriate revenue to account for its operational expenses.
The utility said there was currently no link between the charges raised and the Nersa-approved cost per division.
Finally, it maintained the evolving electricity industry would mean more self-generation comes into play, which meant tariff structures had to be adjusted to protect all customer interests and ensure adequate recovery of Nersa-approved revenue.
Bad news for grid-tied solar users
As part of the new plan, Eskom wants to add a generation capacity charge and increase the network capacity charge of connections, irrespective of how often that connection is used.
While this will have a minimal impact on average electricity users, smaller households with lower monthly consumption and those who self-generate with solar will pay more.
That could become a deterrent for South Africans looking to invest in solar power while staying on Eskom’s grid for backup.
One of the benefits of a solar and battery system is that you have power during load-shedding and can keep your grid usage low, saving on your electricity bill.
Another key change in Eskom’s revised tariff plan is the scrapping of the Incline Block Tariff (IBT).
Eskom would no longer penalise customers for using high amounts of electricity by charging more if they exceed certain thresholds.
Instead, the average tariff charged per kWh will be lower, incentivising increased electricity use.
Eskom is also proposing a new time-of-use (TOU) tariff called Homeflex, which will have cheaper tariffs for electricity consumed during periods of low demand and expensive rates during peak demand.
That could be a boon to solar power users that use their backup power during peak demand and Eskom’s grid in low-demand periods.
That’s provided the higher network capacity charges don’t erode their savings.
Should Eskom’s proposed tariff plan be approved, its impact on prices will vary greatly depending on the type of tariff plan a consumer is on and how much electricity they consume.
We used Eskom’s online modelling tools to calculate how much more or less Eskom will be charging customers who have an Eskom connection but don’t use any electricity from the grid.
Regarding Eskom Direct customers, we found that Homepower users who used 0kWh will be paying between 269% and 330% more simply for having a grid connection, or about four times more than they currently do.
For example, a Homepower 1 customer who previously paid between R208 and R222 for their connection will now be paying between R895 to R956 per month.
Homelight customers will not see any change in their grid connection fees, which currently cost nothing if they don’t use electricity and will continue to remain the case.
The results for Landrate and Businessrate customers who purchase electricity directly from Eskom are a bit more of a mixed bag.
The table below summarises the charges Eskom Direct customers currently pay and could pay under Eskom’s revised tariff plan should they use no electricity from Eskom’s grid.
Eskom Direct electricity tariffs for 0kWh usage
Tariff plan Current monthly Current annual Revised monthly Revised annual Increase/Decrease
Homelight (all) R0 R0 R0 R0 0%
Homepower 1 (25 NMD) R208-R222 R2,624 R895-R956 R11,291 +330%
Homepower 2 (50 NMD) R390-R417 R4,919 R1,438-R1,537 R18,146 +269%
Homepower 3 (100 NMD) R805-R860 R10,157 R3,249-R3,474 R41,010 +304%
Homepower 4 (16 NMD) R127-R136 R1,603 R536-R573 R6,760 +322%
Landrate 1 (25 NMD) R2,016-R2,155 R25,444 R2,005-R2,143 R25,302 -0.6%
Landrate 2 (50NMD) R2,608-R2,788 R32,911 R3,007-R3,214 R37,947 +15%
Landrate 3 (100 NMD) R3,621-3,871 R45,702 R4,306-R4,603 R54,347 +19%
Landrate 4 (16 NMD) R877-R937 R11,068 R968-R1,054 R12,440 +12.4%
Landrate Dx (all) R1,962-R2,097 R24,757 R1,870-R1,999 R23,603 -5%
Businessrate 1 (25 NMD) R1,566-R1,674 R19,764 R1,254-R1,341 R15,830 -20%
Businessrate 2 (50 NMD) R2,141-R2,289 R27,025 R1,734-R1,853 R21,883 -19%
Businessrate 3 (100 NMD) R3,171-R3,390 R40,026 R3,766-R4,026 R47,529 +19%
Businessrate 4 (16 NMD) R0 R0 R0 R0 0%
Regarding the electricity tariffs charged to municipalities, Eskom will adapt its pricing to a one-size-fits-all tariff plan called Municrate.
Under this strategy, Eskom will switch all Homepower, Landrate, and Businessrate customers to the new plan.
This will see monthly generation capacity and network capacity charges between R1,417 and R1,465 in most cases.
The impact will be extremely negative for Homepower customers with notified maximum demand (NMD) of 25kVA and more.
Homepower 1 customers who currently pay between R220 and R227 per month for a connection without any usage will be paying between R1,417 and R1,465 per month.
That works out to an increase of about 543% — over six times more expensive than the current rate.
Homepower 4 customers with an NMD of 16kW will benefit from the change, as will Landrate 4 and Businessrate 4 customers.
According to Eskom’s calculator, none of these customers will be paying any grid connection fees if they don’t use electricity.
All other Landrate and Businessrate customers are also set to benefit, as illustrated in the table below.
It should be noted these fees are not what the end-user pays but the charge Eskom levies to the municipality.