R3,500 for 0kWh — These Eskom customers are getting milked dry
While there are growing concerns about Eskom’s plans to increase fixed charges across many of its tariff plans by hundreds of rand, many might not be aware that rural electricity users have been paying fixed fees well over R1,000 for several years.
One of the major groups of customers most commonly impacted by Eskom’s high fixed charges is farmers and agricultural businesses.
With their operations often being in deep rural areas dozens or hundreds of kilometres from major cities or towns, expanding and maintaining their electricity infrastructure can be significantly more expensive than doing the same over smaller distances within urban areas.
Eskom also has to recoup the cost of such an investment from smaller cohorts of customers.
Many farmers are on Eskom’s Landrate tariffs, which carry significant fixed network capacity and service charges separate from energy consumption fees.
A community of farmers about 30km north of Mossel Bay in the Western Cape recently contacted MyBroadband about a particular issue they had with Eskom’s fixed charges.
One of the farmers maintained that Eskom had deviated from its original agreement to install electricity infrastructure in their area over 30 years ago.
He said Eskom told farmers they would only need to pay the high fixed network charges for about 20 years.
That would supposedly have been sufficient to account for the cost of rolling out the infrastructure and any maintenance up to that point.
However, he alleged that Eskom had reneged on this deal and continued to charge the fixed fee for many years after the initial period passed.
The farmer who spoke to MyBroadband is currently on the Landrate 1 tariff for a three-phase connection with a maximum draw of 25kVA.
That tariff plan includes a R64.03 daily network capacity charge and R53.19 daily service charge, regardless of the amount of electricity consumed.
Therefore, he pays R3,516.60 in a 30-day month for access to Eskom’s grid and 0kWh consumption.
Satellite photo showing the rough location of the farmers complaining about Eskom’s fixed charges.
Fixed cost nearly 10 times urban tariff
Over this year, that will work out to an eye-watering bill of roughly R42,785 in fixed charges.
The equivalent 25kVA connection in an urban area on the Homepower 1 tariff carries a R12.10 daily fixed network capacity charge and no fixed service charge.
That works out to R363 per month, about a tenth of the Landrate 1 user’s tariff.
Even when considering that the total energy charges on the average consumption of 900kWh would be cheaper for the Landrate user than the Homepower customer, the former’s total monthly bill would be about 83% more expensive.
The table below compares the network capacity, service, and energy charges of Homepower and Landrate users, as well as examples of typical bills for Eskom’s average of 900kWh usage per household.
| Eskom tariffs compared Dual-phase 32kVA |
||
| Homepower 1 (Urban) | Landrate 1 (Rural) | |
| Network capacity charge (per day) | R12.10 | R64.03 |
| Service charge (per day) | R0.00 | R53.19 |
| Energy charge (per kWh) |
|
R3.00 |
| Average energy bill (900kWh consumption) | R3,031.86 | R2,705.13 |
| Total monthly bill | R3,394.86 | R6,221.73 |
The farmer also told MyBroadband there were roughly 40 to 50 farms within a 5km radius connected to Eskom’s grid.
While some of these had switched to a prepaid tariff structure, which avoids the significant fixed fees, they pay substantially more than the average per-kWh rate that conventional Landrate users pay.
A farmer who recently paid R1,500 for prepaid electricity only received 168.80kWh of units, working out to R8.89 per kWh compared with the conventional Landrate 1 tariff of R3.92.
On the average monthly consumption of 900kWh, a prepaid Landrate customer would pay R8,001, even more than the conventional users with fixed charges.
If half the farmers in the area still use conventional meters and are on the Landrate 1 tariff, they will pay a combined R1.07 million per year just for their electricity grid connections.
In addition, one of the farmers said that Eskom rarely maintained its infrastructure in the area, raising further questions about how cost-reflective its fixed charges were.
MyBroadband asked Eskom whether it believed the tariffs were justifiable considering all these factors and for more details on its original agreements with farmers in the area, but the utility did not provide feedback by the time of publication.
Dozens of farms cutting down on Eskom
Many farmers are reducing their reliance on Eskom.
MyBroadband recently perused the National Energy Regulator of South Africa’s (Nersa’s) list of large-scale renewable power generating facilities and found numerous farms or agricultural companies had registered big self-generating facilities in 2023.
49 of the facilities from 2023 were registered by entities with “farm”, “farming”, or “boerdery” in their names. The latter is the Afrikaans name for farming.
That excludes any cases in which the term “farm” specifically applied to a solar or wind farm.
The sizes of the installations were significant — ranging from 112kWp to 1.5MWp.
For reference, the current typical six-panel residential solar power installation can provide about 3kWp capacity.
Nevertheless, many of these farms are unlikely to have gone fully off-grid unless they oversized their systems significantly or also bought large generators, meaning they will have to keep paying high fixed charges for supplementing their demand with Eskom’s electricity.
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