Cape Town Electricity Services - Domestic Electricity Tariff Explanation
This entry was posted on September 13, 2010.
Tariffs Valid With Effect From 1 July 2010
Cape Town’s electricity tariffs have been formulated in accordance with the Municipal Systems Act as well as guidelines established by the National Energy Regulator of South Africa.
There are three possible tariffs available for the City’s domestic electricity consumers. The tariffs are applicable irrespective of whether supplies are metered by credit or prepayment meters.
The Domestic High Tariff consists of an energy charge and a service charge and is suitable for consumers purchasing more than 1500 kWh per month.
The energy charge paid by these customers is 79.97 c/kWh plus VAT = 91.17 c/kWh and recovers the cost of energy which is provided to the particular consumer.
The service charge paid by these customers is R 6.58 per day plus VAT = R 7.50 and recovers a proportion of the cost of salaries, support services, network expansion, repairs and maintenance etc which is incurred for provision of the service to them.
The total service charge payable at each prepayment transaction is calculated using the number of days between the previous and present purchases. Consumers charged at this tariff will therefore find that they do not receive the same amount of energy for the same Rand value if the number of days between purchases varies.
The Domestic Low Tariff is a subsidized tariff which has an energy charge of 93.31 c/kWh plus VAT = 106.37 c/kWh. This tariff is suitable for consumers purchasing between 450 and 1500 kWh per month.
Consumers are free to choose between the Domestic High and Domestic Low Tariffs.
The Lifeline Tariff is a special, highly subsidized inclining block tariff which has 3 energy charges, or blocks, depending on the purchase level. Block one (0-50 kWh per month) is at zero cost (this is the Free Basic Electricity portion), Block 2 (50.1 to 150 kWh per month) has an energy charge of 58.11 c/kWh plus VAT = 66.25 c/kWh, and Block 3 (150.1 to 450 kWh) has an energy charge of 70.47 c/kWh plus VAT = 80.34 c/kWh. Note that these figures apply per calendar month, and not per purchase. This tariff is reserved specifically for consumers who purchase less than 400 kWh per month on average (these customers will receive up to 450 kWh, 400 kWh purchased, and 50 kWh free).
Which Tariff Is Best For Me?
The Domestic High Tariff is cheaper for consumers using more than 1500 kWh per month.
The Domestic Low Tariff is cheaper for consumers using between 450 and 1500 kWh per month.
The Lifeline Tariff is specifically for consumers who purchase less than 400 kWh per month on average.
Some consumers may find the service charge applicable to the Domestic High Tariff to be inconvenient, particularly if they want to “top-up” their prepaid electricity a few days before making their normal large purchase.
These consumers are welcome to request to change to the Domestic Low Tariff but will face slightly higher costs if their consumption remains above 1500 kWh per month.
1. Consumers are charged at a specific tariff which is not automatically converted to the cheaper tariff for individual months during which their consumption changes to above or below 1500 kWh. For example, a consumer who purchases more than 1500 kWh during most months of the year would pay this tariff during the months when slightly less than 1500 kWh is purchased but would still find the Domestic High Tariff more cost effective.
2. Domestic premises with supplies of more than 100 Amps connected after 30 June 2009 will be treated as Commercial Customers.
Why Should I Pay a Service Charge When I Have a Prepayment Meter?
The service charges applicable to the various tariffs recover a proportion of the costs of installing, maintaining and operating the electrical network which are incurred in supplying electricity to each consumer group. The service charge applicable to the Domestic High Tariff recovers a proportion of all these costs including the costs of meter reading and billing as well as the costs of internal support and commission paid to vendors of pre-payment electricity. The two latter costs are similar in magnitude for average domestic consumption and form a relatively minor part of the overall service charge recovered over a financial year. In addition, consumers supplied via prepayment meters purchase electricity on average every 5 to 10 days so revenue is generally not received as far in advance as one might have imagined. Domestic tariffs are therefore applied in accordance with average energy purchased and are not influenced by the type of meter.
Do Low Consumption Consumers Subsidize The High Consumption Consumers?
The Lifeline and Domestic Low Tariffs have no service charges and consumers with low consumption therefore pay far less on these tariffs than they would pay at the Domestic High Tariff. Low consumption consumers are in fact subsidized by the other electricity consumers. The following table illustrates this point. Figures include VAT.
Energy Lifeline Domestic Low Domestic High
Received (With FBE) (No FBE) (No FBE)
100 kWh R 33.12* R 106.37 R 319.30 * Cost of 50 kWh
300 kWh R 186.76** R 319.11 R 501.64 ** Cost of 250 kWh
500 kWh N/A R 531.85 R 683.98
900 kWh N/A R 957.33 R 1048.66
1400 kWh N/A R 1489.18 R 1504.51
1700 kWh N/A R 1808.29 R 1778.02
The Free Basic Supply
In July 2001, 20 free kWh per month were provided to all domestic consumers supplied directly by Cape Town. In July 2003, this was increased to 30 free kWh.
National Guidelines established late in 2003 recommended 50 free kWh for consumers using less than 150 kWh per month on average.
From January 2004, 50 free kWh per month were given to all domestic consumers supplied directly by Eskom in the Cape Town municipal area
From July 2004, in order to more accurately target the indigent consumers and to limit the cost of the free basic allocation, Council resolved that 50 free kWh per month would be provided to consumers using less than 500 kWh per month on average.
Currently, the free basic supply of 50 kWh is provided to consumers supplied at the Lifeline Tariff and to Eskom consumers who purchase less than 200 kWh per month on average.