Shocking gap between Joburg and Eskom prepaid electricity prices

A storm of protest is brewing after City Power put up its prepaid electricity prices to the majority of its poor and indigent customers by six to 12 times the inflation rate, and well above Eskom’s prepaid tariff rates for the poor.

City Power is a company owned 100% by the City of Johannesburg, responsible for most of the electricity distribution and retail sales of electricity to residential customers in the Johannesburg metropolitan area.

However, for historical reasons, South Africa’s national electricity utility, Eskom, also distributes and sells electricity directly to certain residential households in the Johannesburg metropolitan area, and in particular, to customers in Soweto and other relatively poor black townships, informal settlements and rural areas.

This article provides some facts and figures comparing City Power’s 2024/25 prepaid electricity tariffs and tariff increases to those of Eskom, focussing on the impact on indigent and poor households with relatively low consumption in the range of 200kWh to 400kWh per month.

City Power’s Residential Prepaid Low tariff is applicable to households in areas served by City Power that are currently formally registered as indigent and appear on the indigent register of the City of Johannesburg.

The Residential Prepaid High tariff is applicable to the significant majority of poor, indigent and other households with single-phase prepayment meters in areas served by City Power.

According to the equitable share grant from National Treasury to the City of Johannesburg for free basic electricity, there are about 950,000 indigent households in the City of Johannesburg metropolitan area that should be receiving free basic electricity.

The City of Johannesburg’s own data shows that about 670,000 households live below the lower-bound poverty line.

However, self-reported data by the City in the annual StatsSA non-financial census of municipalities further indicates that just under 30,000 indigent households are on the indigent register to receive free basic electricity.

This means that some 95% to 97% of all indigent households in the Johannesburg metropolitan area are in fact not on the indigent register of the City to receive free basic electricity, and therefore the Residential Prepaid High tariff applies, while only 3 to 5% of all indigent households qualify for the Residential Prepaid Low tariff and free basic electricity.

City Power residential single-phase prepaid electricity tariffs

City Power’s single-phase prepaid electricity tariffs for the 2023/24 financial year, and those approved by Nersa for the 2024/25 financial year commencing 1 July 2024, are shown in the tables below.

Eskom residential single-phase prepaid electricity tariffs

Eskom’s single-phase prepaid electricity tariffs for the 2023/24 financial year, and those approved by Nersa for the 2024/25 financial year, are shown the tables below.

Comparison

From the above it can be noted that for 2024/25, City Power’s prepaid electricity tariff rates for the very small minority of indigent households that are on the City’s indigent register, are 16% and 26% more expensive than Eskom’s prepaid electricity tariff rates.

The significant majority of City Power’s indigent and poor households are not on the City’s indigent register, and their prepaid electricity tariff rates are 24% and 26%, respectively, more expensive than those of Eskom.

In addition, a fixed charge of R230 per month is applicable to the significant majority of City Power’s indigent and poor households are not on the City’s indigent register, making things much more expensive.

On the other hand, Eskom’s prepaid electricity tariff rates are significantly lower than those of City Power, and are applicable to all indigent households in South Africa, whether they are on the indigent register or not, and there is no monthly fixed charge.

Only a small minority of indigent customers in the Johannesburg metropolitan area that are that are on the City’s indigent register receive the first 50kWh per month as free basic electricity from Eskom, and 100kWh per month from City Power, while the significant majority of indigent and poor customers do NOT receive any free basic electricity.

City Power prepaid electricity costs in 2024/25 compared to Eskom

For the significant majority of City Power’s indigent and poor customers with consumption in the range from 200 to 400 kWh per month, that are not on the indigent register, City Power’s prepaid electricity prices are much higher than those of Eskom, as follows:

City Power and Eskom prepaid electricity costs and increases in 2024/25 compared to last year

For the significant majority of City Power’s indigent and poor customers with consumption in the range from 200 to 400 kWh per month, that are not on the indigent register, there has been a dramatic increase in the cost of prepaid electricity, as shown in the table below.

On the other hand, compared to last year, for the significant majority of Eskom’s indigent and poor households with consumption in the range from 200 to 400 kWh per month, that are not on the indigent register, Eskom’s cost increase for prepaid electricity has been much lower than that of City Power, as shown in the table below.

Conclusions

As can be seen from the above, for the significant majority of indigent and poor households, City Power’s prepaid electricity prices are 49% to 76% higher than those of Eskom, in the range of consumption considered.

In addition, for the significant majority of indigent and poor households, City Power’s prepaid electricity price increases of 33% to 61% are 20 to 47 percentage points higher than those of Eskom.

It can also be seen that City Power’s prepaid electricity prices and price increases hit low consumption (usually poorer) prepaid electricity customers much harder than those with higher consumption.

In situations of extreme poverty and unemployment, such prepaid electricity prices and price increases, with significant disparities between those of City Power and Eskom, and between low consumption and higher consumption indigent and poor customers, are considered to be dangerous, and may increase the risk of social unrest.

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