Johannesburg Prepaid Electricity Users Face R230 Monthly Charge Starting July

Prepaid electricity users in Johannesburg are set to face a significant price increase in July 2024 as new rate changes come into effect. The City of Joburg’s approved structural changes to tariff structures will impact “normal” (non-indigent) prepaid electricity users with a R230 service and capacity charge, alongside pending tariff hikes.

New Charges and Pending Approvals

While the National Energy Regulator of South Africa (Nersa) is yet to approve the city’s proposed 17.9% tariff hike, the structural changes are already set to take place.

• Service Charge: A R230 monthly fee will be levied on non-indigent prepaid electricity users.
• Initial Proposal: Initially, the proposal was for a R550 monthly fee, but this was revised down to R230.

This means that prepaid users will incur a surcharge on their bills irrespective of their actual electricity consumption.

Reasons Behind the Charge

The city justifies this charge by stating that even though prepaid electricity users consume electricity on demand, the network must still ensure that the distribution infrastructure is available.

• Tariff Alignment: The move is part of a broader plan to align prepaid tariffs with conventional tariffs. The city plans to increase these further over the next few years to achieve full alignment.

“Compared to residential conventional customers, the prepaid customer contribution to network availability cost is still very inadequate and requires a substantial increase in the next three to five years to fully align with the conventional tariff,” the city stated.

Impact on Poor Households

Historically, prepaid fees and surcharges have been proposed and subsequently removed due to the significant impact on poorer users, who predominantly use prepaid meters. The city has attempted to mitigate this by differentiating between low (indigent) and high (regular) users. Low users will be exempt from the surcharge and will experience lower price increases, subsidized by regular users.

Reality of the Indigent Register

Energy expert Chris Yelland highlights a major issue: the city’s register of indigent households does not accurately reflect the number of poor households.

• Discrepancies: According to Yelland, the National Treasury’s equitable share grant indicates there are about 950,000 indigent households in Johannesburg that should receive free basic electricity. However, city data shows that approximately 670,000 households live below the lower-bound poverty line.
• Underreporting: Self-reported data by the city in the annual StatsSA non-financial census indicates that just under 30,000 indigent households are registered to receive free basic electricity.

This discrepancy suggests that around 95% of indigent households, who should be exempt from the R230 fee and lower tariff hikes, will likely be charged the regular rates.

Significant Cost Increases

Yelland’s calculations indicate that these households could end up paying between 45% and 65% more for electricity under the new structure.

Conclusion

The upcoming changes in Johannesburg’s prepaid electricity tariffs are set to impose a significant financial burden on many users, particularly those in poorer households. The city’s attempts to mitigate these impacts by distinguishing between indigent and regular users may not be sufficient due to discrepancies in the indigent register. As the new rates and charges come into effect, it is crucial for residents to stay informed and for the city to address these discrepancies to avoid further financial strain on its most vulnerable populations.