In the world of business the large order, large consumer is King – every salesperson dreams of landing a large order and is willing to really sharpen that pencil to get the order.
We call that “Competition”.
In the world of business large consumers are courted, fawned over and receive preferential pricing at rates far below that of the normal occasional consumer.
In the world of our Electricity EskoMonopoly things are a lot different – the more you consume, the more you pay.
The rest of the world calls that “Socialism”.
Our EskoMonopoly appoints ‘agents’ to sell electricity to the consumer. In the Port Elizabeth area, The Nelson Mandela Bay Metropolitan Municipality is the sole EskoMonopoly ‘agent’ and determines it’s own end user tarrifs based on the Eskom Pricing and it’s infrastructure capital and maintenance requirements. The Metro also has to determine pricing to take into consideration the dictates of government to provide free electricity to the poor – read on to see that this is a tiny component to consider even though close to 80 000 households receive free electricity.
In effect large users are not allowed to deal direct with Eskom and are forced to deal with their local ‘agent’. This makes the electricity component of their product mix very expensive and the ‘agent’ complacent to social ills such as the stealing of electricity as that amount lost to theft pales in comparison to the amount collected in revenue from industrial users.
Lets examine the Nelson Mandela Bay Metro Tarriff structure:
If, as a domestic consumer, you are being given free electricity and consume a small amount above your free quota then you pay the LOWEST price per kWh at R0.7027 per kWH
If, as a domestic consumer, you are one of the largest users of electricity then you DO NOT receive a tarrif equivalent to your fellow non rate or utility paying fellow citizen – your electricity rate, as a bulk consumer, shoots up to R1.3803 per kWh
Domestic Consumers are all rated according to the IBT (Inclined Block Tariff) whereby the more you consume, the more you pay – I suppose that one could call it a tax on the rich!
As a small business, presumably consuming more electricity, you will pay an additional monthly basic charge of R138.39 and R1.1504 per kWh
As a medium business you enter the realm of obfuscation and receive the ‘dubious benefits’ of: Different Winter and Summer charges; A Demand Charge of R89.42 per kVA added to your bill; A Basic Winter and Summer monthly charge of R303.52 and are charged rates per kWh (based on the time of the year and energy peak time) varying from R0.4378 to R3.655338 per kWh.
Compounding the confusion even more is that Medium Business has FIVE tarrif types: Time of Use; Metered Demand; Metered Demand – Single Rate; Pre-Paid and Multi-Rate Customer T50 T61.
As a Large Business, presumably consuming large amounts of electricity and really keeping the economy growing, you receive a spanking of an altogether different kind: Your Demand Charge per kVA is discounted though to R87.66; Your Basic Winter and Summer Charge shoots up to R2 261.05; Your Monthly Basic Charge also shoots up to R2 261.05 per month and are charged rates per kWh (based on the time of the year and energy peak time) varying from R0.4378 to R2.535932 per kWh.
Large business falls under one of two tariffs: Time of Use or Metered Demand.
So – looking at the comparison between medium and large business you may say that yes large users are getting preferential rates and you would be wrong – the kicker is the Demand Charge per kVA. A large user can have a 500 kVA rating so before that large energy user even begins to consume a single kWh of electricity they will face a bill of R48 352.10 – add consumption to this and the figures run into Millions of Rand per annum.
For the sake of comparison – the 2013 accepted Eskom averaged tariff charge to municipalities was 55 cents per kWh – unfortunately this average tariff is a misnomer as one has to minutely examine and determine:
- Which of FIVE transmission zones your municipality is situated in
- Choose one of SIXTEEN Voltage supply choices
- Adjust for TWO demand Seasons
- Schedule operations around THREE peak situations for each season
- Choose from SIXTEEN tariffs per peak graded by Transmission Zone and Voltage
Let’s put the Nelson Mandela Bay Electricity supply in perspective:
Electricity is supplied to over 297 000 customers within the Nelson Mandela Metro area, resulting in a turnover of approximately R1 800 000 000 per anum.
Prepayment meters, which have been made available to ease budgeting, are now used by 77% of domestic customers.
A limited supply (75 kWh/month) is currently provided at no cost to approximately 78 000 indigent families.
The Metro, like most large urban areas in South Africa, receives power from ESKOM. The incoming voltage is 132 kV and power is distributed to industrial, commercial and residential consumers at tariffs that are claimed to be amongst the lowest in the world. Two gas turbines are available to supply the CBD with power in the event of an incoming supply failure.
The Metering Division manages the metering of 220 000 domestic, 950 commercial and 170 industrial electricity consumers.
Metering information from meters located at the sites of large consumers is transmitted to a central computer at Munelek. A website is available to remotely read industrial power users exceeding 500 kVA.
Approximately 70% of electricity usage is by industrial and commercial consumers – representing R1.26 Billion rand of the Metro’s annual R1,8 billion of electricity sold in the NMB area.
How, as a domestic, small or medium sized business can you ensure that your electricity charges are brought to a minimum?
- Install Solar Geysers
- Install LCD Lighting
- Automate your Building
- Switch to Gas
- Drastically reduce your IBT Bracket by installing Grid-Tie Solar
- Eradicate your consumption portion by making use of the Metro’s Feed in Tariff (FiT) Scheme – one of only two in the country.
Of course the will to act on the different tariffs is also closely aligned to the amount of revenue collected by the government from VAT: In 2011/12 VAT charged on Electricity sales out of Eskom was approximately R17.388 Billion. Add the onward charged VAT on Municipal sales at double the price and we have a substantial amount of money flowing into “Fire Pools” and exclusive “Soccer Fields” within ‘Thatch Roofed Estates”.
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