SA Electricity and Energy Minister Kgosientsho Ramokgopa has published proposals aimed at making electricity tariffs more transparent and strengthening regulation of the country’s evolving energy market.
Under the proposed system, municipal electricity bills would show consumers the different costs contributing to the final amount charged, rather than only reflecting the quantity of electricity used.
Power and Energy Expert Professor Vally Padayachee said the proposal is supported by the revised Electricity Pricing Policy, which was last updated in 2008. “The current price of electricity in South Africa has gone through the roof,” Padayachee said.
Padayachee warned that electricity prices have become unsustainable for households and businesses, with further increases likely to damage economic activity and living standards. “It’s no longer sustainable, and it has to come down because, if it continues, it’s going to mess up the economy and the lives of people,” Padayachee said.
According to Padayachee, the revised policy introduces three key changes to the electricity pricing system.
The first is greater transparency, allowing consumers to understand the components included in electricity tariffs and charges. “The new pricing policy, once it’s approved after public input, will be more transparent. So the tariffs will be more transparent to the public,” Padayachee said.
The second change would strengthen the regulatory framework governing electricity prices, tariffs and charges.
The proposed approach would unbundle tariffs across the electricity value chain, separating the costs associated with generation, transmission, distribution and retail.
The third change would regulate the relationship between the different parts of the electricity system as SA creates a more competitive wholesale electricity market.
Padayachee said the unbundling of tariffs could enable consumers and regulators to identify where costs arise and whether charges are justified.
The reform comes as government proceeds with plans to establish an independent Transmission System Operator separate from power producer, Eskom. The proposed operator is expected to oversee access to the transmission network and support competition between electricity producers.
Padayachee expressed hope that stronger regulation and transparency would eventually reduce electricity prices. “Hopefully, as the Minister is alluding to, this will bring down the prices of electricity significantly,” Padayachee said.
–ChannelAfrica–
