Electricity policy may reshape, not reduce, household power bills - IOL

Zama Khanyase, Chairperson of the Portfolio Committee. The committee was concerned that a draft electricity pricing policy will not lead to lower electricity bills.

The Portfolio Committee on Electricity and Energy expressed concern that electricity prices are unaffordable for regular South Africans.

On Wednesday, the committee received a presentation from the Department of Electricity and Energy on a revised draft electricity pricing policy (EPP).

The committee said the policy relates to an electricity regulatory model that does not address bringing down prices or capping the cost of electricity at the consumer level. The committee was concerned that the revised EPP was steering towards sector market transformation.

Members of the committee observed that the policy says a great deal about the tariff, but considerably less about what an ordinary household will actually pay, as the policy changes not just the level of tariffs, but the structure of the bill. The committee said consumers could face separate energy, capacity, transmission, distribution and other service charges, as well as subsidies, legacy costs and municipal charges.

Zama Khanyase, Chairperson of the Portfolio Committee on Electricity and Energy, said the revised policy also introduces stronger monitoring, compliance and verification measures to ensure that pricing principles are applied consistently and that accountability and implementation are improved.

“Previously, limited monitoring and confirmation mechanisms led to gaps in applying core policy requirements,” Khanyase said.

She said bills will be unbundled to indicate energy costs, network charges, ancillary services and municipal surcharges, so that consumers understand what they are paying for. This will make it easier to dispute inaccurate charges and prevent hidden fees and disguised cross-subsidies.

The committee heard that the current EPP 2008 was developed for a fully regulated electricity sector. The committee said ongoing electricity sector transformations, including the introduction of market-based mechanisms and increased competition, necessitate a revised policy framework aligned with the evolving electricity market.

Khanyase said the original Act stated that electricity should be affordable and subsidised to ensure it is not a commodity for trading, but a utility for industrialisation.

“Now we are treating it as a trading commodity, and moving away from the objectives of industrialisation and the provision of cheaper, more cost-effective electricity, using electricity as a throttle for economic development rather than an enabler,” Khanyase said. 

Addressing issues around double charges, the committee questioned whether the new electricity pricing formula deals with double charges originating from municipalities.

The department said in its presentation that the EPP provides the national policy framework governing electricity tariff setting in South Africa. The department establishes the principles, structures and rules that guide the electricity pricing determinations made by the National Energy Regulator of South Africa (NERSA), Eskom, municipalities and other licensed electricity providers.

The department said the EPP establishes national principles and tariff path certainty; provides a framework for transparent, efficient and cost-reflective tariffs; guides NERSA, Eskom and municipalities; aligns pricing with a competitive market; and strengthens social protection and accountability.