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Home arrow Blog arrow How to Avoid Electricity Arrears and Reduce Consumption
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How to Avoid Electricity Arrears and Reduce Consumption

It has been made public and final that Eskom has been approved a 31.3% increase in electricity tariffs from the 1st of July 2009. This is less than the 34% which Eskom asked for.

Eskom asked for an interim increase of 34% in tariffs until it finalizes its’ financing plans. However, the National Energy Regulator of South Africa (NERSA) approved only 31.3% at this time and also reduced the time to 9 months for this interim increase.

The decision for 31.3% constituted 25% increase that was project by NERSA in 2008 and 6.3% on inflationary count. The 6.3% inflationary count is lower than Eskom expected. When Eskom submitted the requested it calculated inflationary count at 9%. The increase itself is really 4 times higher than the current inflation rate; hence it stands to reason that both consumers and businesses are very unhappy about such a large increase.

That said it is to be remembered that some municipalities will put an additional markup in addition to these increases, which in effect makes the increase in tariffs even greater than the 31.3% which is only the increase that Eskom was approved.

The 31.3% also included 2 cents per kw/h environmental levy on non-renewable energy sources.

In summary Eskom had been approved 31.3% increase from the 1st of July, which is less than the 34% requested and also only for 9 months rather than the 12 months requested. That said if one is to add municipalities markup this 31.3% will be higher.

So what happens after the 9 months?

First of all Eskom has to finalize its’ funding model in its’ second year price determination. This means they will have to submit this to NERSA, media says probably by September. This will determine the price increases form April 2010 till April 2012.

Generally speaking it stands to reason that there will be more increases maybe not as high as the previous ones, but can’t be lower than inflation rate either. Though there are no projections or assumption into the future increases the media says NERSA expects the increases to be higher than inflation rate.

For property landlords both in residential and commercials this means that tenants will take more strain on cash flow and risk or arrears is become even greater than before. Cash strapped tenants both in residential and commercial need to plan carefully their expenses. With the increases of electricity no one can afford anymore surprise bills on post paid electricity .

It has become essential for landlords to help their tenants both in residential and commercial to plan their electricity usage. The best way to do this is really to have a monitoring system that enables the tenants to check their usage and maybe change appliance that consume too much electricity.

While being able to monitor usage on electricity with devices such as prepaid meters, the tenants can actually pay less electricity and start investing in long term electricity efficient appliances (e.g. swap electricity heaters to gas heaters).

Just to give a small example; and old geyser consumes far more electricity to heat up the water than a new one. On that same note adding a timer to the geyser will reduce even further the usage of electricity.

By reducing the usage with both cost effective devices and better consumption habits some will actually manage to keep their electricity bills as low as prior to the increases in tariffs while others will mange to use less as to their budget and make sure such increases are not effecting their cash flow as harshly as currently predicted.

Landlords themselves both in commercial and residential have to be very weary now of arrears because any arrears that they used to experience will increase from July 2009 by 31.3% or more on defaulting tenants that do not or can not pay the electricity bills.

For landlord using prepaid metering systems is a simple solution to avoiding arrears which they will be liable to pay in any case to the municipality.

For more information on prepaid meters and metering solutions please visit: www.PrePaidMeters.co.za .

Comments
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Morne Prinsloo - Keep it up !     | 41.243.221.xxx | 2009-07-22 09:21:34
I have found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Look forward to reading more from you in the future. If you want you are more then welcome to visit my home loan website by Googling (Mortgage Plus cc). Keep up the good work !!!! :lol:

http://www.mortgagepluscc.co.za
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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.

 
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