The Portfolio Committee on Electricity and Energy in South Africa has expressed concerns that a revised draft electricity pricing policy may not lead to lower electricity bills for regular South Africans. The committee received a presentation from the Department of Electricity and Energy on the policy, which 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 is worried that the policy focuses on sector market transformation rather than reducing costs.
The committee observed that the policy says a great deal about the tariff, but considerably less about what an ordinary household will actually pay. The policy changes not just the level of tariffs, but the structure of the bill. Consumers could face separate energy, capacity, transmission, distribution, and other service charges, as well as subsidies, legacy costs, and municipal charges. This has raised concerns that household bills may not decrease as expected.
Zama Khanyase, Chairperson of the Portfolio Committee on Electricity and Energy, said the revised policy 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. The committee believes this will help prevent hidden fees and disguised cross-subsidies.
The revised policy will unbundle bills 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. The committee heard that the current EPP, introduced in 2008, was developed for a fully regulated electricity sector, which has since undergone significant transformations.
The committee is concerned that the policy is treating electricity as a trading commodity rather than a utility for industrialization. The original Act stated that electricity should be affordable and subsidized to ensure it is not a commodity for trading. The committee questioned whether the new electricity pricing formula deals with double charges originating from municipalities.
The Department of Electricity and Energy said 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 EPP aims to provide a framework for transparent, efficient, and cost-reflective tariffs.
The committee's concerns highlight the challenges of balancing the need for affordable electricity with the need for a sustainable and competitive electricity market. The revised policy aims to align pricing with a competitive market and strengthen social protection and accountability. However, the committee's concerns suggest that the policy may need further revisions to address the needs of regular South Africans.
Key points
- The revised electricity pricing policy may not lead to lower household bills.
- The policy introduces stronger monitoring and compliance measures to prevent hidden fees.
- The policy unbundles bills to increase transparency and accountability.
