New electricity pricing plan faces consumer cost questions
South Africa’s Portfolio Committee on Electricity and Energy has welcomed the Department of Electricity and Energy’s presentation on the draft Energy Pricing Policy (EPP), while criticising the department for taking too long to present it.
Committee members said the success of the policy would not be measured by how it looks on paper, but by its impact on the monthly electricity bills of ordinary households.
They said the policy provides considerable detail on tariffs but less clarity on what consumers will ultimately pay. The proposed changes would alter not only tariff levels but also the structure of electricity bills, potentially separating energy, capacity, transmission, distribution and other service charges, alongside subsidies, legacy costs and municipal charges.
The department said the EPP would provide the national framework for electricity tariff-setting in South Africa. It would establish principles and rules to guide pricing decisions by the National Energy Regulator of South Africa (NERSA), Eskom, municipalities and other licensed electricity providers.
The current electricity pricing policy dates back to 2008, when the sector was largely regulated. The department said changes in the electricity market, including greater competition and market-based mechanisms, required a revised policy framework.
Pricing principles
The proposed policy aims to establish clearer national pricing principles, improve tariff certainty and transparency, and strengthen monitoring, compliance and accountability.
It also proposes unbundling electricity bills to show energy costs, network charges, ancillary services and municipal surcharges. The department said this would give consumers greater visibility over what they are paying and make it easier to challenge inaccurate charges.
The policy also provides for improved targeting of free basic electricity through stronger indigent identification and municipal administration.
However, committee members questioned whether the proposed framework would actually help reduce electricity costs for consumers.
They said they had asked for a simple pricing model that would answer a basic question: how much will households, businesses, farms and other users actually pay for electricity?
Members were particularly concerned that the policy focuses on restructuring the electricity market rather than setting out a clear mechanism for reducing or limiting consumer prices.
The proposed cost-reflective tariff model also came under scrutiny. Committee members warned that electricity prices could rise substantially under such an approach, although the department said the policy itself does not provide a mechanism for determining a specific retail price.
Double charges
The committee also questioned whether the new pricing formula would prevent municipalities from imposing double charges.
The department said the policy would allow NERSA to introduce standardised charges across municipalities, addressing inconsistencies and double-charging concerns that have occurred in the past.
Despite its concerns, the committee welcomed the policy’s emphasis on free basic electricity and efforts to strengthen the grant, saying this could make the support more effective for vulnerable households.
The committee has asked the department when it will develop a basic pricing model that clearly shows how the proposed electricity market transformation will affect consumers. - Distributed by APO Group on behalf of the South African Parliament
