R1,615 per month with zero usage — Big problem with electricity prices in South Africa’s largest city

The South African Photovoltaïc Industry Association (Sapvia) has called the large gap between the fixed electricity fees for prepaid and postpaid customers in Johannesburg “unfair discrimination”.

The response comes after the association’s PV Working Group assessed the City of Johannesburg’s (CoJ’s) proposed electricity tariffs for its next financial year starting July 2025.

Sapvia urged the city to reassess its postpaid fixed tariff and work towards eliminating the difference between prepaid and postpaid customers.

The association explained that CoJ was the only major metro where there was a big difference in the amounts these customers paid, even if they consumed the same amount of electricity.

As it stands, Joburg’s electricity utility, City Power, charges prepaid customers a fixed monthly network and service charge of R230.

While that fee sparked a backlash from Joburg residents when it was implemented last year, it is far lower than what customers with conventional meters and postpaid billing pay.

As it stands, these customers must cough up roughly R1,070 in fixed charges, over four times greater than the prepaid charge.

Under the city’s proposed budget for the next financial year starting July 2025, it plans to keep the prepaid charge at R230. However, the fixed fee is set to increase by nearly 51% to R1,615.

If implemented, the fixed charge for conventional postpaid customers will be over seven times greater than that of prepaid users.

The variable energy charges are slightly lower for postpaid customers than prepaid users.

However, Sapvia found that a household consuming as much as 900kWh in a month would still pay over R1,000 more on its monthly bill than a prepaid household with the same consumption.

The differences are even greater for households consuming less than that amount.

There also appears to be little justification for the difference.

Municipalities typically argue that conventional postpaid users are charged more because their accounts require more resources for billing and administration.

Several major municipalities have strongly encouraged prepaid meter adoption as it reduces administrative load and can help curb electricity theft.

However, although some metros charge more for postpaid accounts, most major metros in the country have the same or similar fixed fees for prepaid and postpaid.

The table below summarises the current and proposed fixed charges across major municipalities. The new charges for Eskom Direct customers already came into effect at the start of April.

Postpaid fee should be close to the prepaid tariff

The working group’s assessment was based on the National Energy Regulator of South Africa’s (Nersa’s) three core principles in setting tariffs — Cost-reflectivity, Fairness and equity, and Efficiency.

Sapvia said Nersa recently determined that Eskom tariffs for fixed costs paid by its postpaid users were not cost-reflective.

This fee stood at R222 in the previous financial year but increased to R423 in April.

Sapvia argued that if Eskom’s fee was deemed exorbitant, it indicated Johannesburg’s much higher charge was also not cost-reflective.

Furthermore, the associations argued that the price failed to meet the “Fairness and equity standard,” as it could not be fair that a postpaid user pays seven times more in fixed fees than a user on prepaid.

Lastly, the tariff fails to be efficient. The association said City Power prepaid customers and postpaid customers were facing different price signals.

Therefore, one of the two structures must be incorrect by definition, it concluded.

“An efficient tariff will lead the customer to make a decision that not only benefits him but also contributes to minimising costs for other users,” Sapvia said.

“Our recommendation: We urge COJ to reassess its tariff and work towards eliminating the difference between prepaid and postpaid customers.”

“The question is whether prepaid users should pay more in fixed fees or whether postpaid customers should pay more.”

Sapvia refrained from recommending a specific figure. However, it said that the Nersa decision on Eskom tariffs indicated that the true level should be significantly closer to R230 than R1,615.

The COJ’s public participation period for the new tariffs will come to an end today (12 May 2025), after which the city will finalise the tariffs.

Fixed charge bad for selling electricity to municipality

While Sapvia did not state its reasons for highlighting this particular issue, the high fixed charges could negatively impact solar-adopting households in the city.

The ability to sell back electricity to credit charges on one’s municipal account can be a major incentive to invest in a solar power system.

However, residents who want to sell back electricity cannot use prepaid meters; their feed-in must be measured on a bidirectional meter linked to a postpaid account.

These more advanced meters are already much more expensive than most common meters, discouraging people from joining feed-in schemes and realising the full potential of their solar systems.

The exorbitant fixed charge in Johannesburg further deters customers from selling back power, as a seller cannot use a prepaid account.

Johannesburg has yet to implement its long-promised feed-in regime. The last approved tariff was about R1.02, including VAT.

Even if it installed a bidirectional meter for free, a solar power user would need to generate an additional 1,583kWh of electricity just to work off their R1,615 fixed charge.

According to an online tool from well-known solar power installer Solar Advice, that would require 22 solar panels, each producing 455W. With slightly larger 550W models, a user would still need 18 panels.

Entry-level solar power systems typically have four or six panels, while systems with more than 12 panels are generally considered to be on the larger side.