The City of Johannesburg (CoJ) should reassess its tariff and work towards eliminating the difference between prepaid and postpaid customers, as prepaid customers will pay a fixed monthly fee of R230 and postpaid customers will pay a fixed monthly fee of R1 615, said industry organisation the South African Photovoltaic Industry Association (SAPVIA).

The CoJ has the particularity that two customers using the same amount of electricity pay completely different amounts based on how they pay, the organisation pointed out.

Prepaid customers pay the fixed fee and a variable fee depending on how many kilowatt-hour units they use. The first 350 kWh are cheaper, with the rate increasing after that.

Postpaid customers pay the fixed fee, plus a variable fee that varies based on consumption, with the sliding scale for consumption being slightly different from prepaid customers starting at below 500 kWh and going up in stages beyond 3 000 kWh, it said.

“The question is whether prepaid users should pay more in fixed fees or whether postpaid customers should pay more.

“The recent National Energy Regulator of South Africa (Nersa) decision on Eskom tariffs tends to indicate that the true level should be significantly closer to the R230 than the R1 615,” SAPVIA stated.

For example, customers on postpaid using 900 kWh, in an average household, will be paying over R1 000 more for the same amount of units as a customer on prepaid.

The CoJ released its proposed new electricity tariffs with a period open for public participation until May 12 after which the city would finalise the tariffs.

The SAPVIA residential PV focus group has assessed the tariffs against three core principles in setting tariffs, namely cost-reflectivity, fairness and equity, and efficiency, which should incentivise efficient electricity consumption and demand management.

Prepaid users pay some of the lowest fixed fees in the country whereas users on postpaid pay the highest, SAPVIA emphasised.

Nersa recently released a decision on Eskom tariffs, which is an indication that the fixed cost paid by postpaid users is not cost reflective, it added.

Further, it cannot be deemed fair that a user on postpaid pays seven times more in fixed fees than a user on prepaid. The differentiation amounts to unfair discrimination, it said.

The tariff also fails to be efficient. An efficient tariff will lead the customer to make decisions, such as renewing appliances, energy efficiency, energy alternatives such including solar power, among others, that not only benefit the customer but also contribute to minimising costs for other users.

Prepaid customers and postpaid customers are facing different price signals. One of the two structures must be incorrect by definition, SAPVIA argued.