Is someone else’s debt pushing up your electricity bill?

Those who pay their electricity accounts could be carrying some of the cost when Eskom fails to recover money owed through municipalities.

Electricity and Energy Minister Kgosientsho Ramokgopa raised the issue on Tuesday, 18 August, while outlining government’s Revised Electricity Pricing Policy.

Government targets costs passed on to paying customers

According to a statement, the policy aims to tackle affordability while changing how electricity tariffs are structured.

Ramokgopa said between one and 2.5 percentage points of the current tariff could be linked to Eskom’s inability to recover money owed through municipalities.

“You are not allowed to punish those who are paying on account of those who are not paying,” he said.

What could change on your electricity bill?

Government wants electricity bills to give consumers a clearer breakdown of what they are being charged for.

This could include generation costs, transmission and distribution network charges, ancillary services and municipal surcharges.

Ramokgopa said Eskom and municipalities should be able to show customers how they arrived at the amount they owe.

For households, this could make it easier to see how much of a bill relates to electricity use and how much comes from other charges.

The proposal does not guarantee cheaper electricity. It is aimed at making tariffs more transparent and ensuring consumers can see what they are paying for.

Changes for vulnerable households

Government also wants to improve the way it identifies households that qualify for Free Basic Electricity.

Ramokgopa said information already held by government, including social grant and Home Affairs records, could help identify eligible households.

The approach could reduce reliance on municipal beneficiary lists, which require regular updating.

Annual verification is also proposed so households can be reassessed when their circumstances change.

More certainty over future electricity prices

Another part of the policy focuses on making electricity prices more predictable.

Government wants the National Energy Regulator of South Africa (NERSA) to provide greater certainty over the direction of tariffs.

This could help households and businesses plan for electricity costs instead of waiting for annual tariff decisions.

The framework will also have to accommodate a changing electricity market, including independent generators, traders and bilateral electricity supply agreements.

Special pricing agreements could also be used for energy-intensive industries where electricity costs threaten jobs and operations.

Ramokgopa said government was engaging major industrial users, including smelters, about possible negotiated tariffs.

When will the changes happen?

Consumers will not see the changes on their next electricity bill.

Cabinet has approved the Revised Electricity Pricing Policy for public comment, meaning the proposals must still go through the consultation process before they are finalised.

The Department of Electricity and Energy says affordability has become a major focus as South Africa’s electricity system stabilises.

For consumers, the policy could ultimately answer a question many households have when their electricity bill arrives: What exactly am I paying for?