Eskom’s Prepaid Tariff Structure For Residential Customers Explained

Eskom has provided a simple explanation to help you understand prepaid tariff structure for residential customers.

The National Energy Regulator of South Africa (Nersa) approved Eskom’s allowable revenue rise from standard tariff customers to be 8.76% in March for Eskom’s direct customers, which was implemented on 1 April this year, and 6.9% for municipalities which was then implemented at the beginning of July.

It noted that the tariff structure is divided into two blocks with each block charging a different rate. If a customer purchases more electricity during the month, they will be subjected to a higher rate.

“This tarrif works on the principal that the more you purchase in a single month, the higher the price for that portion of the electricity, which means that customers are charged at a higher rate as their consumption becomes higher,” it said.

Energy expert Ted Blom said that prepaid electricity users in South Africa are getting ‘ripped off’ by non-competitive and opaque prepaid power suppliers – while most are still not aware of how to get the most out of their power at the best price.

Blom told Jacaranda FM that users who are frustrated and confused by prepaid electricity prices increasing throughout any given month are not alone, as many users are not aware of the Incline Block Tariff system, which hikes prices as users consumer more electricity.

The system is deliberately opaque, he said, as suppliers monopolise specific areas and developments.

“You can’t shop around – the supplier owns the lines that go to your house, and that’s not open to others. This will only change with a review of the industry. Whoever you have a supplier is who you are stuck with,” he said.

The energy expert also pointed out that most prepaid users don’t know that the best time to top up their electricity is on the first of the month.

This is due to Eskom’s Incline Block Tariff system.

Under this system, units are split into different blocks. The more you use, the more you pay per block. So if you pay as you go through the month, or pay for more power than you need, you will end up paying more, but not getting more units on average, Blom said.

Eskom’s Incline Block Tariffs divide the electricity price into several steps or blocks. The first block of electricity is at the lowest price. As customers purchases more electricity during the month, the electricity bought will eventually fall in block two, which is more expensive.

This process repeats automatically as the customer purchases further electricity to move into block 2. At the end of the month, the history is reset and the customer will again start the next month from block 1.

Eskom says the process to move from the one block to the next is automatic and depends only on the amount of electricity that is acquired by the customer. The movement to the next block is not affected whether the purchases are spread over many transactions or if all the electricity is part of one transaction.

Blom said to get the most out of your prepaid electricity, average users should pay for their 1,000 units on the first of the month.

“If you pay for more than you need – such as a year’s supply in a month – you will get ripped off second-to-none, as you will end up buying the most expensive blocks,” he said.

“Buy what you need in a month, at the start of the month, that will get you the best deal.”

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