The Electricity and Energy Committee expressed concern that the proposed electricity pricing policy will not lead to lower electricity bills for ordinary South Africans, as current prices are considered excessive.
On Wednesday, the committee received a presentation from the Department of Electricity and Energy regarding the revised Electricity Pricing Policy (EPP). The committee noted that this policy is linked to an electricity regulation model that does not solve the problem of lowering prices or setting a price cap on electricity at the consumer level. Furthermore, the committee expressed concerns that the revised EPP is moving towards transforming the market sector.
Bill Structure
Committee members observed that the policy details tariffs but says significantly less about what an average household will actually pay, as the changes affect not only the tariff levels but also the bill structure itself. The committee warned that consumers may face separate charges for energy, capacity, transmission, distribution, and other services, as well as subsidies, outdated expenses, and municipal payments.
Ms. Khanyase, Chairperson of the Electricity and Energy Committee, reported that the revised policy also introduces stricter monitoring, compliance, and verification measures to ensure consistent application of pricing principles, as well as improved accountability and implementation.
Khanyase noted that previously limited control and verification mechanisms led to gaps in the implementation of key policy provisions. She added that bills will be broken down into components to reflect energy costs, network charges, ancillary services, and municipal surcharges, allowing consumers to understand what they are paying for. This will simplify challenging inaccurate bills and prevent hidden fees and disguised cross-subsidies.
The committee learned that the existing EPP 2008 was designed for a fully regulated electricity sector. However, the committee emphasized that ongoing transformations in the electricity sector, including the introduction of market mechanisms and increased competition, require revising the legal framework to align with the evolving electricity market.
Commodity Trading Concerns
Khanyase reminded that the original legislation stipulated that electricity should be accessible and subsidized so as not to become a commodity for trade, but rather remain a utility service for industrialization. However, she stated that it is now being viewed as a tradable commodity, which deviates from the goals of industrialization and providing cheaper and more cost-effective electricity, using it as a brake on economic development rather than a factor stimulating it.
In response to questions about double charges, the committee asked whether the new pricing formula addresses the issue of double charges faced by municipalities. In reply, the Department stated that the new electricity pricing policy would allow the regulator to introduce standardized charges across all municipalities to eliminate past problems.
Establishing Rules
The Department presented that the EPP serves as the national policy framework regulating electricity tariffs in South Africa. This document defines the principles, structures, and rules that guide pricing decisions made by the National Energy Regulator of South Africa (NERSA), Eskom, municipalities, and other licensed electricity suppliers.
Furthermore, the Department reported that the EPP establishes national principles and trajectory certainty for tariffs; provides a basis for transparent, efficient, and cost-reflective tariffs; guides the work of NERSA, Eskom, and municipalities; aligns pricing with the competitive market; and strengthens social protection and accountability.