Why do I sometimes pay more for the same number of electricity units?
Please note that this article is meant to inform domestic and residential consumers. Different structures and tariffs may apply to commercial and industrial, but that is beyond the scope of this article.
As you probably already know, electricity rates are increasing once again with just shy of 10% come July. If you use prepaid electricity, you may have noticed that you do not always get the same number of units for the same amount of Rands or you may have heard that you should buy electricity only at a certain time of the month. To help you understand how it works and also supply you with the correct information, we will unpack how the different tariff structures so you can plan well and stop the guesswork.
A few things to know before we continue:
1) Tariffs differ from one municipality to the next.
2) Municipalities predominantly have either a flat tariff structure, also called a single energy rate tariff or a stepped tariff structure, also called an inclining block tariff.
3) The different tariff structures are applicable to you, even if you do not use prepaid electricity.
How does a stepped tariff structure work?
If your municipality employs the stepped tariff structure, it means that your electricity consumption is divided into blocks. Each block has a price per unit of electricity consumed in that block. The tariff is the lowest in the first block and increases as the consumer moves to the next block.
Bracket 1: The first 200 units are sold at R1.50/kWh.
Bracket 2: The next 200 units are sold at R2.00/kWh.
Bracket 3: The next 200 units are sold at R2.50/kWh.
Bracket 4: Anything you buy after that, is sold at R3.00/kWh.
Let us look at two examples. Susan, living in Potchefstroom uses approximately 800 kWh per month.
On 1 April she buys 200 units and pays R300.00.
On 10 April she buys another 200 units and pays R400.00.
On 17 April she buys 200 more units and pays R500.00.
On 24 April she buys 200 units at R600.00.
If she runs out of electricity on 29 April, she should only buy enough units to last until the end of April instead of buying the usual 200 units as she is now buying units from the most expensive bracket. If she buys 200 units on 29 April, she will pay R600. If she waits until 1 May, she will pay only R300 for the same number of units.
Susan’s sister, Laura lives in Delareyville where a flat tariff structure is used. Let us say that the tariff in Delareyville is R2 per unit. If Laura uses the same amount of electricity as her sister, she would pay R1,600 for 800 units. If she runs out of electricity near the end of the month, it wouldn’t matter how many units she bought, as the tariff does not change according to the number of units bought in the preceding days.
If your municipality employs a flat tariff structure, you will always pay the same amount per unit, regardless of how many units you already have bought. (For some tariffs the charge may be time and/or seasonally differentiated.) If, however, your municipality employs a stepped tariff structure, you will pay different rates at different times of the month. It is important to note here that the rates do not change because of the time of the month. The reason for the rate change is the fact that the buyer has already bought a certain number of units since the beginning of the month, and is now buying units from the next bracket. It concludes therefore that in order to get the most units for your Rands, you should only buy enough electricity to last until the end of the month, but it doesn’t matter on which day of the month you buy your units.
Please note that the examples above are for illustrative purposes only and does not reflect the true tariff structures and/or rates applicable to any particular municipality.