Tariff Increases

Editor March 18, 2010

The problem

On 24 Feb 2010, NERSA approved Eskom’s MYPD2 (Multi-Year Price Determination 2) with increases in Eskom’s nominal tariffs of 24.8% for the 2010/2011 year, 25.8% for the 2011/2012 year and 25.9% for the 2012/2013 year. The average electricity price will rise from a current R0.33/kwh to R0.415/kwh this year, then go up to R0.52/kwh in 2011/2012 and finally to R0.65/kwh in 2012/2013 thus doubling the average rate in the next 3 years.

Photo credit: e³°°°Flash!

NERSA also issued guidelines to prevent municipalities from passing on the full nominal amount of the increase as buying the electricity from Eskom only represents approximately 67% of the cost of providing electricity by the municipalities. The three years of municipal increases were approved at 15.33% effective July 1, 20l10, 16.03% effective July 1, 2011 and 16.16% effective July 1, 2012. The result of this will be to level out what end user customers pay for electricity as many current municipality tariffs are significantly higher than Eskom’s direct to the customer tariffs.

Finally, in a real blow to the domestic segment, NERSA announced the long awaited “residential inclining block tariff structure.” In simple terms, the more you use the higher your tariff.

  • Very small household users, less than 50 kwh/mo, will see a 10.59% reduction in 2010 followed by increases of 5.4% and 5.5% in the succeeding 2 years.
  • The next level up, households using 51 – 250 kwh/mo will see a reduction of 5.2% in 2010 followed by increases of 13.23% and 13.5% in years 2 and 3.
  • Households using 351 – 600 kwh/mo will face a much larger increase of 21.95% in 2010 followed by increases of 25.8% and 25.9% in years 2 and 3.
  • Finally, larger households using 601 or more kwh/mo face a punitive tariff increase of 35.82% in 2010, followed by increases of 25.8% in 011 and 25.9% in 2012 which ultimately brings this tariff to R1.32/kwh in 2013. This is in stark contrast to the average domestic tariff of R0.7862/kwh in 2013.

These residential block tariffs will be carried over to the municipalities so all residential customers will be subject to these tariffs. The average consumption of all households in South Africa is 1100 kwh/mo according to Eskom. This means that hundreds of thousands, if not millions of individual homeowners will see their electricity bill more than double over the next three years.
With rising energy costs and a volatile energy future in South Africa we all need to find ways of cutting down on electricity consumption which ultimately affects our finances. Eskom is building new power plants, but these are years away as it takes 5 – 6 years minimum from the time construction is started until a new power plant comes online. The first of South Africa’s new power plants are only scheduled to come online in 2013 if, and only if, there are no delays in costruction.

The solution

For the individual homeowner there are a number of things you can do to reduce your electricity usage immediately and at very low cost. There are also more significant things with commensurate costs. Let’s look at where your electricity goes.

First up is your geyser or geysers for those who have more than one. In fact, do you know how many geysers you have and where they are? Geysers are the number one consumer of electricity in the home and can use up to 50% of all the electricity you consume. What can you do?

  • First, look at your geyser usage. Some homes have multiple geysers and one or more may be in areas of the house, such as guest quarters, that are only used infrequently. If so, turn these geysers off at the DB board and only switch them on a few hours before guests are due to arrive then switch them off after the guests leave. Our motto at Electro Sense is, “There is no more efficient than off.” so turning a geyser off if it is not necessary is the most efficient thing you can do.
  • The next easiest thing to do is to be sure the geyser temperature is set to no higher than 55 C. Many geysers are set much higher which is wasteful. The amount you save will vary based on how high the temperature is before you set it down to 55 C.
  • The third thing to do is to insulate every geyser with a geyser blanket. This can reduce electricity consumption by the geyser by up to 27%. Even if your geyser is SABS approved and says it is insulated, it is only common sense that if you put your hand on the outside and it feels warm then heat is being lost and more insulation in the form of a geyser blanket will save energy and money.
  • Not as easy to do but also very effective is to insulate the hot water pipes leading from the geyser to the taps. In some cases this will not be possible as they may run inside walls but even the pipe run in the ceiling where the geyser is mounted will help.
  • Another thing that can be done is to install timers on the DB board which turn the geyser circuits off when they are not needed. For example, the timer might turn the geyser on at 4 am and allow it to run until 8 am (or whenever everyone who uses it to shower, etc would be done and gone). If there is no one home during the day then it might stay off until a couple hours before it is needed in the evening then go off again until 4 am. Again, there is no more efficient than off and if the whole system is insulated then the water will stay warm while the geyser is off and will not take long to heat up when needed.
  • solar heater

    photo credit: Arsel Özgürdal

  • Higher initial cost but much lower running costs over many years will come from installing an SWH (Solar Water Heater). Capital costs for SWHs are coming down as more are sold. You can buy an SWH for as low as R12,000 and can spend up to R40,000 or more depending upon the size and type. In addition, Eskom offers a rebate depending upon which specific unit(s) you buy. If you manage your hot water use effectively, solar heating can virtually eliminate your cost of hot water.

If you implement all the above, you can save more than half of you total cost for running your geysers. Since geysers account for 30 – 50% of your entire home electricity bill, this could reduce your total electricity bill by up to 25%, a considerable savings.

Photo credit: Jan TikAir

The second area to look at is HVAC (Heating, Ventilation and Air Conditioning). HVAC is typically the second highest user of electricity in the home and if you have underfloor heating becomes far and away the largest cost in winter. Unless you are building new or doing extensive remodelling, your options are more limited here and are mainly related to the temperature settings you choose. In general, your electricity usage will change by about 6 – 15% for each degree you raise the temperature of the air conditioning in the summer and lower the temperature of the underfloor heating or heat pump in the winter. Also, you may not know that turning the air conditioning to less than 18 – 19 C provides no extra cooling but wastes a significant amount of electricity and therefore money. What can you do?

  • Set the temperature a degree or two higher in the summer to reduce A/C costs.
  • Set the temperature a degree or two lower in the winter to reduce underfloor heating costs.
  • Seal up all windows and doors. A huge amount of heat and cooling are lost through improperly sealed doors and windows. There are many types of foam strip insulation available that can cut these losses greatly. The amount will vary from home to home but the cost of installing it is generally very low so it is worthwhile.
  • Not as easy but very effective is to add insulation to the attic areas. There are many types of insulation that can be laid on top of the ceiling. These can save up to 20% or more of your heating and cooling costs and will make the house feel more comfortable as the temperature will be more uniform throughout the house and throughout the day.
  • If you are building new or doing extensive remodeling then consider solar hot water underfloor heating. Rather than a resistance coil burning electricity, tubes that circulate hot water are installed in the concrete floor. Solar panels heat water that is circulated. In addition, an insulated storage tank holds hot water to keep the system running at night. This is relatively expensive to install but, again, compared to the cost of running electric underfloor heating over a period of years, it can be cost effective.
  • On the air conditioning side there are also options that are more major changes but have significantly reduced operating costs. One is to install a heat pump system in place of a conventional A/C system. Heat pumps can reduce operational costs by up to 30%.
  • A second A/C alternative is a solar powered absorption chiller system. This system uses solar energy to heat water. The energy in the hot water is then used to make cold air through an absorption chiller unit. Somewhat expensive upfront, these systems are very inexpensive to run and can reduce energy use for air conditioning by up to 80%.
  • Finally, there are evaporative cooling units that use the heat absorbed by water as it evaporates to cool the air. Again, there is the upfront cost but the operating costs are a fraction of conventional A/C.

In summary, there are many options to reduce your home energy consumption. The capital costs and running costs vary from solution to solution. How much you can save, how much will it cost you and what is the optimum solution for your home will vary.

You can contact Electro Sense via their web site or by phone on 011-708-3835.

About Editor, the author

  • capewatersolutions

    All of us can expect our municipal bill to sky rocket even more as it will not only be our electricity bill that will be costing us more. Water tariffs are also set to increase with in the months to come.
    You have some great ideas on how to save on your electricity bill.

  • DJBOLDY

    What applies to one should apply to all with these price increase. Is it not the same thing that eskom produces the electricity but why differ in price. Then government should stop the 50kw free supply of electricity to low cost houses. Instead give at least 100kw free to the house that consumes 351 – 600kw per month.

  • Gerrit

    Can we save by buying bulk prepaid for a year before the increase?
    If so when should we buy?

    Centurion, Zwartkops

  • http://www.solarhotusa.com/ hot water heater systems

    Solar water heater is a popular method to eliminate the energy drain by using natural energy. Cost cutting on monthly power bills, making money by selling excess power and getting tax rebate from government helps to cover the cost of solar energy systems.

  • Johngordon54

    WHY DO WE HAVE TO PAY VAT ON ELECTRICITY AT THE CURRENT %AND WHY DONT THE JZ LED UNIT CONSIDER A CUT FOR EVERYONE ON VAT ISSUE

  • Irritated

    What on earth is up with the new electricity tariffs, the percentage is insane!  How can you do this to people! It is unacceptable.

  • Mr D

    What government should do is implement a “green grid” and promote the usage of renewable energy and reduce energy cost.We must pay our taxes and now we must pay double for our electricity, that is outrageous!….

  • http://profile.yahoo.com/DFBH32UFYEDAJGUTIFGRFDBT6A y

    Flip…. Don`t you feel bad those that pay 40% of their income get Hospital, worse than anything else that they must pay for, their electricity is Double and tripled, their job security is less. they don`t get pension nor housing nor free electricity instead pay more for everything else. Without us the country would collapse. We are TAX payers but don`t get anything except. Tolls and more rates and extra charges

  • http://profile.yahoo.com/DFBH32UFYEDAJGUTIFGRFDBT6A y

    monoply dude… Its LEGAL.some1 needs to open competition for ESKOM
     

  • Zondant

    is it possible to have a consumption of 2000 kwt when you stay with your son and you are hardly at home? my electricity ranges from R 2000 per month, and I am one of thos people who is conscious about saving electricity. i stay in a complex. I am being supplied by third party contractor.

  • NoiseMKR

     Oven + Plate = 18 Amps, V x A = 3960 Watt/H
    Average TV = 4 Amps, V x A = 880 Watt/H
    100 Watt Light = 0.45 Amps, V x A = 100 Watt/H
    Average Cellphone Charger = 0.08 Amps, V x A = 17 Watt/H
    PC with 400 Watt PSU = 1.5 Amps average, V x A = 300 Watt/H
    Geyser Average = 11 Amps every heating cycle, V x A = 2500 Watt/H

    On average, if your at home for 8 Hours using

    1. Oven and plate for 1 hour = +- 4 Units
    2. 4 x 100 Watt globes over 6 hours = 2.4 Units
    3. Computer use for 6 Hours = 1.8 Units
    4. Geyser use 3 times average 1 hour cycle = 2.5 Units
    5. Tv 4 Hours = 3.5 Units

    Total = 14.2 Units x 30 Days = 426 Units Per Month

    It should be around the R450 Range average, and even though these specs ie. the geyser is questionable,
    you are being ripped off by at least R1000 friend. Confront your landlords.

    We shouldnt be standing for this shit, everyone should check their meters every month,
    and report to eskom and pay only that amount. Its once a month people, please.
    How can eskom feel its fair to guess usage, dont be pushed over, fuck them man

  • Megan

    what is the price for electricity per unit?

  • Cathy

    I am a pensioner and live in a townhouse complex with 6 units.   We are now being charged a fixed amp supply (450 x R7.95) = R4078.35 and a service charge of 256.63 incl. VAT  I am having to pay R722.53 per month,  over and above what I pay for electric usage which is approximately R200 per month.   With the winter rates it is now costing me well over a thousand rand a month.   Can you tell me why we are being charged these exorbitant fixed charges.

  • chloe

    I stay out on a farm I work from Monday to Friday I have a very small house, I am never at home during the week and most of the time on weekends as well I am renting my place and my land lord gives me a electrical bill every month, but for one persons electricity I am paying R1400 + every month??? where can I find out about how much it is per unit???? Anyone that can help me please???