Higher Costs for Using Less Electricity
Eskom’s recently approved Retail Tariff Plan (RTP) for 2025 introduces fixed charges that could increase electricity costs for households that consume less power. While the National Energy Regulator of South Africa (Nersa) claims the new structure will improve affordability, many consumers may face higher bills due to increased fixed charges.
What Changes Are Coming?
The RTP brings a major shift in Eskom’s tariff structure. The key change is the introduction of a fixed Generation Capacity Charge (GCC), applied daily per point of delivery. This means that even if a household reduces its electricity usage, they will still face higher fixed costs.
Additionally, Eskom is removing the Incline Block Tariff (IBT) system, which previously provided lower rates for customers who used less electricity. Instead, a flat tariff structure will be introduced, which will benefit high-usage consumers but penalise those who consume less.
Who Will Be Affected the Most?
Households with low to moderate consumption will see their electricity bills rise, especially those that do not qualify for subsidised tariffs. This mainly includes middle-class and emerging middle-class households.
Grid-tied solar users, who typically rely less on Eskom’s supply, will also be affected. With lower energy consumption, these users will bear the brunt of higher fixed costs, making self-generation less financially beneficial.
Why This Change?
Eskom is struggling with declining revenue as more consumers turn to self-generation due to load-shedding and high electricity costs. By increasing fixed charges, the utility aims to compensate for lost income. However, this strategy could backfire, driving more consumers towards alternative energy solutions and further reducing Eskom’s revenue.
Potential Long-Term Impact
With the RTP changes, Eskom risks accelerating its death spiral—where increasing prices push more consumers off the grid, leading to further revenue losses. If Eskom fails to cut costs, it may be forced to continue raising prices, further alienating customers.
Critics Speak Out
Environmental group The Green Connection has compared Eskom’s approach to charging customers just to enter a store, regardless of whether they make a purchase. According to Green Connection’s Liz McDaid, households with self-generation help reduce demand on the national grid and should not be penalised. Instead, she suggests that tariffs should reflect actual backup needs, with charges based on usage during peak periods.
However, she also warned that time-of-use tariffs could be harmful to low-income households that lack battery storage, as they cannot shift their electricity usage to off-peak times.
Conclusion
Eskom’s new tariff plan may simplify the pricing structure, but it does not necessarily make electricity more affordable for all. Households with lower energy consumption will bear the brunt of the changes, while higher-usage consumers benefit. Unless Eskom finds ways to reduce costs, its reliance on higher fixed fees could lead to more customers seeking alternative power solutions, further destabilising its financial situation.
