There are currently no regulations in place to control what electricity resellers can charge as service or vendor fees, leaving prepaid users on the hook for charges that increase each year, with no intervention.
Speaking to the City Press, energy regulator Nersa says that resellers like prepaid vendors are not licenced, with all pricing agreements made between them and the actual licensees – Eskom, or the municipalities.
Vendors cannot charge a higher price than the licensees for electricity, but they can add a service fee to bills, which in some cases goes as high as 15% of what users spend on power.
Because this is not regulated, and the process of determining the service fees is opaque, vendors are free to do as they please in this space. In practice, whatever fee was determined between vendors and licensees years ago has been increasing at various rates, annually, the City Press said.
The Electricity Resellers Association of SA told the City Press that it is trying to fix the issue by getting vendors to be more transparent about their billing processes, saying that, by law, some transparency is required.
“There has to be a method where they can show you detailed transaction costs. The company issuing the token must be able to send you a detailed breakdown of how you have been charged,” it said.
As long as this loophole persists, prepaid electricity users will continue to pay high service fees, despite Eskom’s attempts to simplify its prepaid fee structure.
The group recently proposed a complete overhaul of its tariffs, including major changes for its inclining block tariff (IBT) used in prepaid metres. IBT is a confusing setup where unit costs increase based on the ‘block’ being used.
The first block in a month is the cheapest. As users consume more power and buy more units, the purchases move to the next, more expensive block.
Eskom said that its residential tariffs need to be overhauled and proposes ending the use of IBT.
“(The IBT) as a tariff structure is no longer appropriate, is disliked by customers, and is complex to understand and explain,” Eskom said.
“For large low-income/multiple-family dwellings, the assumption that low consumption equals poor may not necessarily be true. Multiple dwellings may also be supplied from a single electricity supply point. An IBT structure has a significant impact on these customers.”
In addition, there are more affluent customers, for example, with holiday homes that unfairly benefit from the inclining block rate, it said.
By moving away from an IBT structure, there will be an impact in that lower-consumption customers will pay slightly more and higher-consumption customers less.
Eskom wants to replace the IBT with a single fee that includes the energy charge (c/kWh), an ancillary service charge (c/kWh), a network demand charge (c/kWh) and a R/day service and administration charge.
In real terms, this would take the charge from 139.99c/kWh and 158.62c/kWh for blocks one and two on Homelight 20A, to a single fixed fee of 141.15c/kWh. For Homelight 60A, the fees would move from 158.44c/kWh and 269.31c/kWh to a fixed fee of 169.10c/kWh, Eskom said.
Source: www.businesstech.co.za