Ramokgopa’s plan won’t convince South Africans to get back on the grid – Outa
· Citizen
The Organisation Undoing Tax Abuse (Outa) has welcomed the Revised Electricity Pricing Plan announced by Electricity and Energy minister Dr Kgosientsho Ramokgopa, saying greater transparency in the country’s electricity pricing could help restore confidence in the market.
However, Outa believes the reforms come at a time when many customers have already taken matters into their own hands, investing heavily in solar, batteries, and generators to reduce their reliance on Eskom and the national grid.
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Outa CEO Wayne Duvenage said rebuilding that trust will require more than a revised pricing framework, and the government needs to do more to convince customers that the grid can once again provide a reliable and cost-effective source of electricity.
Electricity plan comes a little too late
The revised electricity pricing policy aims to tackle high electricity prices by, among other things, offering customers transparency on how their bills are calculated.
The amendment also seeks to end municipalities increasing prices to make up for shortfalls from non-paying customers.
Duvenage said the issue of customers being punished by Eskom and government for challenges that the state was supposed to solve started more than a decade ago, so customers found a more affordable way to survive.
“For more than a decade, Eskom and government have responded to operational inefficiency, poor maintenance, corruption, and declining sales by repeatedly pushing electricity tariffs significantly above inflation.
“Consumers responded exactly as one would expect: businesses and households invested in solar, batteries and alternative energy solutions, while energy-intensive industries reduced consumption or looked elsewhere.”
Government to blame for high cost of electricity
He added that the state is “now confronting a problem largely of its own making”.
This comes as electricity has become expensive and unreliable, and demand for Eskom-supplied power has declined, leaving a shrinking pool of paying customers to carry an increasingly expensive system.
“This is the classic electricity utility death spiral, whereby higher prices and unreliable supply have driven customers away,” said Duvenage.
Independent energy analyst and economist Tshepo Kgadima also raised this issue. He said Eskom has 7 000 megawatts of excess or surplus power because people have moved off the grid.
“Right now, Eskom has got 7 000 megawatts of excess or surplus power. That figure will soon move to 13 000 megawatts, and soon in the next five years, that figure will have moved to 20 000 megawatts of surplus power of electricity.
“Without building one single power station more, because Eskom customers or electricity consumers are migrating off-grid, be they businesses or individuals.”
What will Eskom do to get people on grid?
While Duvenage welcomes the proposals for transparent tariffs, greater competition, protecting paying consumers from the consequences of municipal inefficiency, and ultimately reducing electricity costs, he believes these should have been introduced years ago, “when Eskom’s operational and financial deterioration was becoming increasingly apparent”.
He said the state cannot now expect customers to return to the grid simply because a new pricing policy is being proposed, after spending billions of rand reducing their dependence on Eskom.
“The challenge now is much bigger: Eskom and the broader electricity industry have to win back those customers, who have already made substantial investments in self-generation infrastructure.
“That will require substantially more than restructuring electricity bills. It requires genuinely competitive pricing, reliable supply, efficient management, and a fundamental change in how electricity consumers are treated.”
Will the plan make any changes?
Duvenage said things did not need to get this far; these changes should have been introduced long ago. He raised the question of whether the revised electricity pricing policy will deliver any changes
“The tragedy is that South Africa did not need to reach this point. Had these reforms been introduced when the warning signs were obvious, we may have avoided much of the electricity affordability crisis we face today.
“Government’s new direction is therefore welcome, but it is very late, and the question now is whether these reforms will be bold enough and implemented quickly enough to arrest the electricity death spiral that government and Eskom have helped create.”
Kgadima is also pessimistic about the revised policy, saying it does not make sense, and the minister should be worried “that he is the one leading a violation of the constitution”.
Violation of the constitution
This is the first time since its establishment in 2008 that the Electricity Pricing Policy is being amended. The minister, while announcing the changes, noted that over the past 17 years, household consumption has changed as more people have acquired electric appliances.
Kgadima said independent power producers need to be allowed to contribute power to the grid, which will contribute to lower electricity prices.
“I have for a long time called for a standardised uniform tariff of electricity in South Africa, and I have also for a long time now asserted that an 87 cents per kilowatt hour electricity tariff is what must be instituted in the country without delay,” he said.
“Now, when the minister says, well, we don’t allow the municipalities to overcharge, we want them to standardise the charge to the consumers regardless of the municipality.
“Municipalities have got no business whatsoever to supply electricity or to even charge for the supply of electricity.”