The Electricity Supply Commission in South Africa (ESCOM) is known to be the primary source of public utility supply in the country. Over the years, the commission has increased its tariffs many times, and they have always been on the increase and have never come lower.
Tariff is the cost per electricity unit as sold to consumers. The increase in tariffs over the years may be due to some factors, including operational costs, the need for infrastructure development, and financial stability.
What is an electricity tariff?
An electricity tariff is the amount of money that consumers pay for using electricity. In simpler term, we can say that electricity tariff is the amount per unit electricity consumed. This rate can change based on different factors like consumption levels, time of use, and customer category. When Eskom increases tariffs, it means the price of electricity goes up.
For example, the ESKOM tariff was at an average of R1.84 per kWh in 2022 but has reportedly been increased again recently, and the increase may take effect starting in 2024. The increase is expected to take the tariff up to R2.07 per kWh
Eskom Tariff Increase History
1923–1990s (stable tariff)
Eskom was established in 1923 and had kept its tariffs relatively low and stable in earlier decades. Their primary goal then was to provide affordable electricity to support industrial growth and economic development in South Africa.
1990s (Post-Apartheid Era)
After apartheid ended, Eskom faced the challenge of expanding electricity access to underserved areas. This expansion required significant investment, leading to the first notable increases in tariffs. These increases were necessary to fund new infrastructure and cover rising operational costs.
2000s (Infrastructure Strain)
Eskom’s infrastructure started to show signs of strain due to increased demand. The utility needed to invest in new power plants and upgrade existing ones, leading to higher costs.
Significant Tariff Increases:
- 2008: Eskom requested a 60% increase but received 27.5% approval from the National Energy Regulator of South Africa (NERSA). According to a Business Report article, this increase raised the average price from ZAR 0.1991 per kWh to approximately ZAR 0.2538 per kWh.
- 2009: Another 31.3% increase was approved to help finance the construction of new power plants like Medupi and Kusile. This brought the average price to approximately ZAR 0.3333 per kWh.
2010s (Medupi and Kusile Projects)
The construction of Medupi and Kusile power stations faced delays and cost overruns, which increased Eskom’s financial burden. To cover these costs, further tariff increases were necessary.
Notable Tariff Increases
- 2010: A 24.8% increase, raising the average price to around ZAR 0.42 per kWh. This was reported by Fin24.
- 2011: Another 25.8% increase, bringing the average price to around ZAR 0.53 per kWh, according to a report by Engineering News.
- 2012: A 16% increase, raising the average price to around ZAR 0.61 per kWh, as stated by BusinessTech.
- 2015: A 12.69% increase was approved, raising the average price to about ZAR 0.80 per kWh.
2020 and Beyond
Eskom’s financial situation has remained challenging, with high debt levels and the need for operational improvements.
Recent Tariff Increases:
- 2020: An 8.76% increase was approved, raising the average price to about ZAR 1.13 per kWh.
- 2021: A 15.63% increase, raising the average price to about ZAR 1.31 per kWh.
- 2022: A 9.61% increase was approved, bringing the average price to about ZAR 1.44 per kWh.
Impact on Consumers and the Economy
Higher Living Costs
The frequent tariff increases have made electricity more expensive for South African households and businesses. This increase in costs affects the overall cost of living and operational expenses for businesses.
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Energy Poverty
Rising electricity prices have made it difficult for low-income households to afford essential energy services, leading to increased energy poverty.
Conclusion
Over the years, ESkOM has kept increasing their electricity tariff in South Africa. This may not be their fault, as there are some factors that may always cause the increase, such as operational costs and other factors. Looking at the scenario of the increase over the years, it may not be wrong to say that electricity costs in South Africa may continue to increase. However, there may always be alternative energy sources, like solar electricity. If the cost of electricity becomes unbearable to you, you can still consider solar energy as an alternative. You can decide to buy solar panels that are affordable and can serve your needs, as solar energy is believed to be cheaper when managed well.
