There is little doubt that SA household electricity bills are going to go through the roof. But there is some confusion as to what makes up the bill. For example, many people have disputed Eskom's claim that its average electricity price is 33c/kWh.
This is understandable, given that Eskom's average residential tariff for the 2009 financial year is 54c/kWh. Dragging the overall average rate down is the lower price Eskom charges its bigger industrial customers, at 22c/kWh.
Why do households apparently subsidise the power parastatal's industrial clients?
Eskom says they do not.
The argument goes like this: many more electrical networks have to be built for smaller customers than for large industries. These networks have to be maintained as well, which adds to the costs.
Eskom also loses more electricity along the lines that supply smaller customers, because the power flows at a lower voltage.
The smaller customers tend to use more power around peak periods (mornings and evenings). To cater for increased demand at these times, Eskom often has to start running its open-cycle gas turbine power stations. These burn diesel, which is far more expensive than coal.
Power users subsidise free basic electricity for the poor. In the 2010 financial year, this is expected to total about R2,1bn. In fact, Eskom says in its price increase application to the National Energy Regulator of SA, "industrial customers subsidise the bulk of Eskom's residential supplies".
The company asked the regulator to allow it an average price increase of 22c/kWh/year for three years, effectively tripling prices. It is expected to hand in a new, lower tariff increase application by Monday, after having discussed its initial application with municipalities and national treasury.
With prices as they are, the most expensive appliances for a household to run are tumble driers, geysers, kettles, stoves and ovens. According to Johannesburg's City Power, a tumble drier costs 93c/hour to run, a kettle 62c/hour, an oven at 220°C 62c/hour and a swimming pool pump 62c/hour. A 100 W light bulb burns at 3,1c/hour.
According to City Power, a bath with 12 cm of water costs 96,1c, while a five-minute shower costs half that, at 48,1c.
Most urban households in SA buy their power from a municipality, which adds a percentage to the price at which it buys the power from Eskom. This is to fund maintenance on the municipal power grid.
Gas supplier Air Liquide (connected via the Ekurhuleni Metro) has consistently complained it pays more for power than its competitors that buy directly from Eskom. In 2007, it said the difference was 27%.
Government has plans to do away with the buying and selling of power by municipalities, rather giving this responsibility to six regional electricity distributors (Reds) across the country. Earlier this year, minerals & energy minister Buyelwa Sonjica said delays in implementing the Reds system were costing government R2bn/year. The state pegs SA's electricity distribution maintenance backlog at R27bn.
Municipalities, though now on board, had resisted the plan, because many of them obtain up to 67% of their revenues from electricity sales. They were concerned they would lose this revenue.
But government has promised them 8% of the surcharge when they are part of the Reds, and a R1,2bn/year allocation for the first five years.
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