The South African government has outlined measures aimed at reducing electricity costs while keeping tariffs cost-reflective and protecting vulnerable households and key economic sectors.
The proposals are contained in the Revised Electricity Pricing Policy, which updates the 2008 policy and was approved by Cabinet for public comment last month.
Electricity and Energy Minister Kgosientsho Ramokgopa said tariffs have increased by about 977% since 2007, highlighting the need for a new pricing framework.
10-year electricity price forecast
The policy will require the National Energy Regulator of South Africa (NERSA) to publish a 10-year electricity price forecast, giving businesses and investors greater certainty when planning long-term investments.
It will also establish a framework for transparent, efficient and cost-reflective tariffs while preventing hidden costs from being passed on to consumers.
More competition in electricity market
Government is also opening the electricity market to greater competition as part of reforms aimed at reducing Eskom's dominance.
The new framework will allow generators and electricity users to enter into bilateral supply agreements outside of Eskom, supporting the transition towards a wholesale electricity market.
Stronger protection for vulnerable households
The policy will strengthen support for poor and vulnerable households while tackling the impact of unpaid municipal electricity debt.
Ramokgopa said consumers who pay their electricity bills should not be forced to carry the cost of those who do not.
Government also plans to modernise the administration of free basic electricity by creating a central database linked to Home Affairs and social grant records. This is intended to make it easier to identify households that qualify for assistance.
Support for energy-intensive industries
Government will also introduce a Negotiated Pricing Agreement mechanism to support electricity-intensive industries, including businesses that are not currently in financial distress but could contribute to economic growth and job creation if given more competitive electricity prices.
Ramokgopa said the overall objective is to improve efficiency in the electricity sector and create conditions that could ultimately result in lower electricity costs.
The proposals are contained in the Revised Electricity Pricing Policy, which updates the 2008 policy and was approved by Cabinet for public comment last month.
Electricity and Energy Minister Kgosientsho Ramokgopa said tariffs have increased by about 977% since 2007, highlighting the need for a new pricing framework.
10-year electricity price forecast
The policy will require the National Energy Regulator of South Africa (NERSA) to publish a 10-year electricity price forecast, giving businesses and investors greater certainty when planning long-term investments.
It will also establish a framework for transparent, efficient and cost-reflective tariffs while preventing hidden costs from being passed on to consumers.
More competition in electricity market
Government is also opening the electricity market to greater competition as part of reforms aimed at reducing Eskom's dominance.
The new framework will allow generators and electricity users to enter into bilateral supply agreements outside of Eskom, supporting the transition towards a wholesale electricity market.
Stronger protection for vulnerable households
The policy will strengthen support for poor and vulnerable households while tackling the impact of unpaid municipal electricity debt.
Ramokgopa said consumers who pay their electricity bills should not be forced to carry the cost of those who do not.
Government also plans to modernise the administration of free basic electricity by creating a central database linked to Home Affairs and social grant records. This is intended to make it easier to identify households that qualify for assistance.
Support for energy-intensive industries
Government will also introduce a Negotiated Pricing Agreement mechanism to support electricity-intensive industries, including businesses that are not currently in financial distress but could contribute to economic growth and job creation if given more competitive electricity prices.
Ramokgopa said the overall objective is to improve efficiency in the electricity sector and create conditions that could ultimately result in lower electricity costs.
