Latest news with #JohanHopley
The Citizen
10-07-2025
- Business
- The Citizen
Ekurhuleni metro and Nersa lock horns over electricity tariff discrepancy
'Resulted in thousands of residents being overcharged for electricity on 1 July.' Resellers don't know which of two sets of tariffs to apply – and if they fall into arrears entire residential complexes could have their power disconnected. Image: Supplied A discrepancy between the electricity tariffs approved by the Ekurhuleni metro council on 29 May 2025 and those approved by energy regulator Nersa thereafter has left residents angry and confused. Electricity resellers, who must base the tariffs they charge end-users on the municipal tariffs, are at a loss. 'You don't know what to implement, because who do you believe – the metro or Nersa?' asks Johan Hopley, chair of the Electricity Resellers Association of South Africa (Erasa). Electricity resellers play a critical role – especially in sectional title complexes where the municipality supplies electricity only to one bulk meter. The developer provides the internal distribution network, and a reseller thereafter manages the metering and billing of each unit. They buy electricity from the municipality at a bulk tariff and resell it to the user in each unit at a margin. ALSO READ: Nersa approves 12.7% electricity tariff hike for Eskom Resellers must be familiar with tariffs Resellers are, however, by law prohibited from charging each end user more for electricity than it would cost them had they bought directly from the municipality. It is therefore critical that resellers know exactly what the municipal tariffs are. The council implemented the following tariffs for residential customers on 1 July: 0-50kWh – R2.82 50-600kWh – R2.82 600-700kWh – R4.41 More than 700kWh – R11.44 Basic charge (Tariff A2): R142.50 This corresponds with the tariffs published in Schedule 2 on its own website and approved by Nersa. Source: Nersa website It does not, however, correspond with what was approved by the council: 0-50kWh – R2.59 50-600kWh – R2.59 600-700kWh – R4.03 More than 700kWh – R10.43 Basic charge (Tariff A2): R109.78 These discrepancies are not limited to this customer category. Apparently relying on the council approved tariffs, the metro 'admitted' its 'mistake', which was 'due to a technical error' and gave an undertaking that those residents who bought prepaid electricity on 1 July will be credited accordingly. The tariffs were adjusted the next day. ALSO READ: Nersa slashes Eskom's tariff hike – but consumers could pay the price in taxes In reaction, the Freedom Front Plus (FF+) says the error 'resulted in thousands of residents being overcharged for electricity on 1 July'. 'The most contentious issue is the incorrect basic charge of R142.50, which was deducted upfront for electricity purchases, meaning residents received fewer units than they were entitled to,' says FF+ councillor Denise Janse van Rensburg, Deon Conradie, pricing expert and former senior manager for tariffs at Eskom, says municipalities are, in terms of the Electricity Regulation Act (ERA), only allowed to charge tariffs that have been approved by Nersa. Such tariffs are supposed to be based on the cost of supply plus a reasonable margin. Should the municipality charge lower rates, as will be the case in Ekurhuleni after the 'correction', it may indicate some form of subsidisation. Conradie says any deviation from the tariffs Nersa approved must also be approved by the regulator. Subsidies must be transparent and strongly motivated. ALSO READ: Eskom proposes further tariff restructuring to ensure 'transparency and fairness' Corrections will fall foul of ERA It therefore stands to reason that the 'corrections' the metro has promised will fall foul of the ERA. On the other hand, tariffs must also be approved by the council in terms of municipal legislation. That assumes that there is only one set of tariffs, both approved by the council and Nersa, which is seemingly not the case in Ekurhuleni. Hopley says this is extremely problematic for resellers, who had very limited time from the date Nersa approved the metro's tariffs to the implementation date on 1 July to calculate the tariffs they must charge end users to remain viable. Initially he battled to get the approved tariffs from Nersa. They were only published on the regulator's website on 7 July. Now there are two different sets of tariffs and resellers are not certain which one to base their tariffs on. ALSO READ: At least electricity tariff increase is not 36%, but still 3 times inflation rate Hopley says Ekurhuleni changed the structure of its bulk resellers' tariff, which has resulted in a complete mismatch between wholesale and retail tariffs. In the new structure resellers, who before were only charged a basic fee plus the cost per unit consumed, must now pay a demand charge, network charge, basic charge – and the unit cost is based on time-of-use. In practice, the bulk electricity cost of a residential building with 145 units that each use 400kWh per month on average has increased by 20.84%, while the municipal retail tariffs that resellers are not allowed to exceed have increased by 11.32%, calculated over a year. Hopley says there is no way resellers can make ends meet as their margins have been less than 10%. If resellers fall in arrears, it may result in the disconnection of entire residential complexes. This article was republished from Moneyweb. Read the original here.
The Citizen
28-05-2025
- Business
- The Citizen
30% electricity tariff increase is a reality, says Erasa
New tariff structure threatens resellers' business model. Resellers play an important role in the electricity value chain, especially in sectional title schemes – and households using less electricity are now being hit the hardest. Picture: Supplied The Electricity Resellers Association of South Africa (Erasa) will this week decide on a strategy to address members' concerns about a looming 30% increase in electricity tariffs for most of the end-users they serve in Eskom distribution areas, according to chair Johan Hopley. These are households that rent or own sectional title units and use on average 400kWh of electricity per month. They are generally already financially struggling, and such a sharp increase in electricity costs will drastically increase the risk of non-payment. A change in Eskom's tariff structure poses a further threat to the resellers' business model as it limits their ability to recover a loss on higher winter tariffs during the summer months, says Hopley. Electricity resellers play an important role in the electricity value chain, especially in sectional title schemes. In most cases, Eskom or the municipal distributor brings the electricity to one bulk connection point at the gate, so to speak, of the premises. The internal distribution is then done by the developer and managed in the long run with the assistance of a reseller. The reseller buys from Eskom or the municipality at a bulk rate but is legally not allowed to sell it to end users at more than the approved retail tariffs of the local electricity distributor, be it Eskom or the municipality. ALSO READ: Johannesburg's 2025/26 tariff increases — Here is how much more you could pay Impact already being felt According to Hopley, the first Eskom bills based on the new tariffs that were implemented on 1 April show an increase of 30% in buildings' bulk purchase cost. A building in the East of Pretoria, for example, paid R357 921 (excluding Vat) to Eskom in May last year. Based on the same number of units in May this year, the bill runs to R464 081 – a 30% increase. Resellers must pass this on to end users who are expecting an increase of no more than the 12.74% that energy regulator Nersa approved for Eskom from 1 April. That widely quoted number is, however, an average and does not reflect the much higher increases for those using less electricity every month. ALSO READ: Nersa approves 12.7% electricity tariff hike for Eskom A tenant or unit owner who used 400kWh in May last year and paid R1 177, will now have to pay R1 547 – an increase of 31%. This may be a huge shock to smaller households that are already struggling to make ends meet, says Hopley, and may result in lower payment rates – which poses a huge risk for resellers. If they use more electricity, the increase moderates. However, at 600kWh per month it is 28%, which is still pretty steep. Even if they try to use less electricity, the impact will be limited due to Eskom's structural changes as the fixed monthly charges have increased from R195 to R367 per household. The corresponding decrease in the price per kWh is small – from R2.95 to R2.45 (17%). ALSO READ: Electricity tariffs: Ramokgopa reveals how much Eskom customers pay for usage per month Seasonal hurdle for resellers Hopley says the added complication is that Eskom's bulk tariffs are seasonal. This means the reseller pays much more for electricity when winter tariffs apply – in June, July and August – than in the rest of the year. The retail tariffs they must charge end users are however the same throughout the year. Resellers, therefore, used to sell at a loss during the winter months but were able to make up for it during the nine summer months. With the new tariffs, the loss in winter will be much bigger and in summer, the reseller may only break even, which is not at all sustainable. This article was republished from Moneyweb. Read the original here.
