Eskom praising power thieves — while demanding 66% tariff hikes for paying customers

While over a quarter of Eskom’s prepaid customers are stealing electricity and bleeding the utility dry, it wants to slap its law-abiding paying customers with exorbitant price hikes of 66% in the next three years.

The arrival of the key revision number (KRN) rollover deadline on 24 November 2024 confirmed that South Africa’s main power utility is likely losing much more to electricity theft than its previous estimates had suggested.

Speaking after the KRN rollover deadline expired, electricity minister Kgosientsho Ramokgopa revealed that Eskom now estimates it loses R2.5 billion a month due to non-payment by its direct customers.

That works out to about R30 billion per year, substantially higher than the R5.6 billion Eskom said it had lost to electricity theft in its last reported financial year.

Eskom’s estimate is not far off from MyBroadband’s earlier calculations, which were based on the number of meters that remained un-updated in the months before the KRN rollover.

The power utility confirmed that the most likely reason these meters were not being recoded was because they were bypassed or were illegally vending electricity.

Roughly 5.07 million had recoded their meters by 2 December 2024, making up just 73.35% of Eskom’s total prepaid customer base.

Another 1.84 million meters remained on KRN version 1 and are suspected of being electricity thieves.

The fact that this number has barely been reduced suggests that the meters are bypassed completely rather than using illegal electricity tokens, as vouchers from “ghost vendors” would no longer work after the deadline.

Despite the rampant electricity theft revealed by the prepaid electricity meter update process, Eskom has described its KRN project as a “success.”

The power utility has not admitted that its failure to act earlier on illegal connections had potentially cost it billions of rand in revenue every year.

It also had over a decade for the KRN rollover but only started recoding meters en masse from August 2023.

Starting the project earlier would have allowed for the identification of many bypassed and tampered meters years ago and helped crack down on ghost vendors.

Had Eskom intervened earlier, its financial performance may also have looked very different in recent years.

Eskom has estimated that it will post an annual loss as high as R15 billion in the financial year ending March 2024, with an estimated R26.6 billion lost due to electricity theft.

Therefore, Eskom could have posted a profit of R11.61 billion if it had no electricity theft from its prepaid customers.

To break even, it would have needed to reconnect 56% of the electricity thieves on its books.

Not calling a spade a spade

In the statement on its “successful” KRN rollover, the power utility said that its rolling annual average of 2.1 million electricity thieves was moving towards 1.7 million.

It said this was due to roughly 400,000 “zero buyers”, a euphemism for electricity thieves, coming forward.

Eskom generation executive Monde Bala said the utility would continue to treat these users with “dignity and respect” as they had done the “right thing.”

Although the power utility has argued these customers would now become paying users, Impact Services senior manager Johan Hopley recently told Rapport that this would only happen once their meters were inspected, repaired, and replaced.

Hopley also pointed out that affluent households and businesses were also a major part of the problem.

Eskom’s soft-glove approach to electricity theft may warrant a wake-up call, particularly as it is detrimental to paying customers.

It is not hard to imagine the police would quickly become the public’s laughing stock if they called car thieves or shoplifters “zero buyers.”

Eskom’s tolerant attitude may be considered a slap in the face of paying customers, who have suffered under heavy tariff hikes far above inflation for more than a decade.

Eskom CEO Dan Marokane has said the utility is doing everything “practically possible” to ensure everyone pays for electricity.

Marokane said the utility aimed to be sustainable to drive South Africa’s economy and reduce the utility’s burden on the taxpayer.

Critics might argue that a “rolling” annual average of 2.1 million electricity thieves is hardly a sustainable business model.

Instead of ramping up its fight against illegal connections — either by investing more in its own efforts or through more serious calls to government for assistance in resisting communities — Eskom plans to address its plummeting revenues with even higher tariff hikes.

Over the next three years, it has applied for combined electricity tariff hikes of 66% from its direct customers and even more from municipalities.

It also wants to punish lower consumption users including small households and solar power users with much higher fixed tariffs under its retail tariff plan.

Eskom evidently regards paying customers to be easier targets for extracting additional revenue than electricity thieves.

The approach is not only ethically questionable but could pose a threat to Eskom’s future existence.

Huge electricity tariff increases could cause those with the means for installing self-generation to go completely off-grid and those who cannot afford electricity to join the masses already stealing power.