Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom
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c/kWh<br />
IBT blocks<br />
Figure 18: Inclining block tariff structure<br />
Overview of <strong>Multi</strong>-<strong>Year</strong> <strong>Price</strong> <strong>Determination</strong><br />
2013/14–2017/18 (MYPD 3)<br />
Page 128 of 144<br />
The tariff has been successful in lowering the cost of electricity for the poor, but there have<br />
been a number of unintended consequences. Any shortfalls to <strong>Eskom</strong>‟s approved revenues<br />
due to the IBT are recovered from other non-municipality tariffs, excluding rural non-<br />
municipality tariffs. As a result, the IBT shortfall (subsidy) is recovered only from urban non-<br />
municipality tariffs. The complex IBT structure also makes it difficult for customers to<br />
understand and for utilities to implement equitably. The more blocks there are, the more<br />
complicated it becomes.<br />
Most importantly, in the current IBT structure, rates and blocks are the same for all <strong>Eskom</strong>‟s<br />
residential customers. However, <strong>Eskom</strong> residential customers range from very wealthy<br />
residential customers to indigent customers in rural villages, with very different costs and<br />
usage patterns. The residential tariffs therefore need to be restructured to take into account<br />
costs and usage of different customers. <strong>Eskom</strong> has also provided input along the lines set<br />
out herein to NERSA regarding the IBT Consultation Paper issued for public comment.<br />
<strong>Eskom</strong> proposes simplifying and refining the residential tariffs while ensuring that the poor<br />
are protected and that residential customers will be able to choose from a suite of possible<br />
tariff options, as follows:<br />
IBT structure<br />
0-50 kWh 51-350 kWh 351-600 kWh >600 kWh<br />
Consumption (kWh)