Eskom’s new plan to punish solar users

Eskom has proposed a 183% increase in the fees it charges some households for connecting to its grid.

A calculator the power utility recently released shows that if Eskom’s proposal is approved, customers on its Homepower 4 tariff plan will pay R637 per month before consuming a single kilowatt of electricity — up from R225.

The state-owned power utility recently submitted a revised Retail Tariff Plan to the National Energy Regulator of South Africa (Nersa).

Eskom said its plan proposes to restructure its tariffs. It is not an application for an annual price increase and is separate from its multi-year price determination application for a 36% price hike currently before Nersa.

If approved, Eskom said the structural changes would be implemented in its 2025/26 financial year.

The state-owned power noted that its proposal includes several major structural changes to retail tariffs, including for customers with rooftop solar installations.

“Customers with solar rooftop PV connected to the grid who use Eskom-supplied energy as a backup, known as the ‘Eskom battery’ on cloudy days, at night and during the morning and evening peak will still be required to pay for using the Eskom network,” it said.

Eskom has also proposed removing its inclining block tariff (IBT).

“Currently, residential households on prepaid and post-paid pay more per unit as they buy more electricity during the month,” explained Eskom.

“Eskom is proposing to remove the IBT so that low-usage households pay the same price no matter how many times electricity is bought in a single month to support affordability and provide greater access to energy services.”

Some good news for solar users is that Eskom said customers with the technology to export excess self-generated energy onto the grid could reduce their electricity bill through energy credits.

It also said that tariffs for municipal distributors purchasing in bulk are likely to benefit on average from lower costs.

This is due to lower subsidy contributions and reduced fixed charges through consolidating their 15 tariffs into three options.

It is not the first time Eskom has proposed restructuring its tariffs to substantially increase its fixed fees while lowering its variable per-unit prices.

The utility previously explained that this was to better reflect the costs associated with running the grid relative to generating electricity.

Essentially, Eskom said that electricity users were currently paying too little for their grid connection and too much for their consumption.

Several residential solar power users have written to MyBroadband and complained online about Eskom’s proposed changes.

They point out that at the height of load-shedding, government offered a tax rebate on new solar panels to help alleviate the devastating rotational power cuts.

Thanks to an influx of rooftop solar and home battery installations, combined with a much-improved maintenance strategy at Eskom, load-shedding has been suspended since 26 March 2024.

“After helping to end load-shedding, now we are going to be punished after being incentivised to install the solar in the first place. It doesn’t seem fair,” one member of the public said.

As part of the documents it published with its most recent tariff restructuring application, Eskom included a spreadsheet-based calculator that lets consumers compare how the restructuring will impact their monthly bills.

MyBroadband conducted an analysis of the proposed changes using the comparison tool, setting it to Eskom’s Homepower 4 tariff and using its assumptions for the average urban residential profile.

Most of Eskom’s direct residential customers are on the Homepower 4 tariff, which is designed for households with single-phase 16kVA (80A) connections.

We found that the proposed tariff restructuring will significantly impact those who consume less than 750kWh of electricity per month.

These include smaller households, people who are less wealthy, and homes with rooftop solar installed.

Smaller, less affluent, or solar-powered households who use 450 kWh per month will see their monthly bills jump 22% from under R1,500 to over R1,800.

A household consuming 600 kWh of electricity from the Eskom grid per month will see their bill increase by 16% from over R1,900 to over R2,200.

Eskom’s proposed tariff restructuring has a breakeven point somewhere between 760 kWh and 765 kWh per month, where the monthly bill under the old and new structures is equal.

Beyond that point, it will become cheaper as customers consume more units in a month.

The table and chart below summarise how Eskom’s proposed tariff restructuring will affect Homepower 4 users.