Ann Eveleth
Almost four million households could soon benefit from subsidised electricity in a move expected to save hundreds of millions of rands in health costs associated with the use of inferior fuels.
The National Electricity Regulator told Parliament last week it plans to introduce a subsidy, or poverty tariff, to reduce basic cooking and lighting electricity costs for the poorest 60% of the population from early 1999. This could save the country’s overstretched health services more than R750-million each year.
At least 16 000 South African children are hospitalised each year as a result of paraffin poisoning. A recent Medical Research Council study also shows that 86% of children who burnt to death suffered their injuries from alternative fuel sources, including boiling water, paraffin lamps and heaters and cooking fires.
Eskom’s rapid progress on the national electrification programme since 1994 has done little to reduce the pall of black smoke that rises each night over most townships and informal settlements as residents burn coal to cook their food and warm their homes.
The regulator says this is because many newly electrified households simply cannot afford to abandon cheaper fuel sources like coal and paraffin.
These cheaper fuels increase indoor pollution, which in turn increases the incidence of lung disease, particularly among children.
The same fuels also leave thousands of families homeless each year as unnecessary fires raze informal settlements to the ground, often killing sleeping residents.
The Medical Research Council study says that 83% of burn incidents nationwide take place in informal settlements.
The council predicts that if 54% of South African households switch completely to electricity, the country could save R762- million in health costs associated with respiratory disease, burns and paraffin poisoning.
The regulator says this is equal to half Eskom’s annual electrification programme costs. Eskom currently spends R3 000 per new household connection, and has kept pace with its annual target of 450 000 new connections each year. At least 62,4% of households are expected to be electrified by the end of 1998.
But the regulator says much of this investment is wasted as long as newly connected households can’t afford to pay for electricity and continue to use alternative fuels instead.
”The government … is going ahead with the electrification process to ensure the majority of households have access to electricity, but … the provision of electricity does not automatically result in its use as the sole domestic energy carrier. In certain electricity regions (for example Soweto), high levels of coal use have persisted,” says the regulator.
The poverty tariff marks an attempt to bridge this gap – and encourage more efficient use of existing electricity infrastructure – by offering poor families a minimal, basic electricity quota at a reduced price.
The regulator plans to subsidise between 50% and 60% of the costs associated with lighting four bulbs per household for five hours daily and two hours of cooking costs on a two-plate electric stove.
Pensioners, unemployed and disabled people and indigent South Africans who are ”unable to make any monetary contribution toward basic services” will receive a 60% subsidy on the total costs of these minimal lighting and cooking needs, or the first 162kWh of electricity used.
Impoverished individuals, households or entire communities which are ”unable to command sufficient resources to satisfy their basic needs” will receive a 50% subsidy on their cooking costs only, or the first 124kWh of electricity used.
Consumers will have to apply to local authorities to qualify for the poverty tariff, but this will depend on household income levels which are still to be determined.
The regulator says it has not yet finalised cost projections for the subsidy, but points out that South Africa’s electricity transmission network was designed to accommodate the full use of its generation capacity.
”On increasing the amount of energy transmitted across the network, there would not be any additional costs other than transmission losses and slight increase on the maintenance side,” says the regulator.
It says financing options for these and other costs associated with the installation of pre-paid meters in poverty tariff households include channelling a portion of Eskom’s prospective tax bill back into the industry, or cross- subsidisation of these costs by wealthier consumers.
Wealthier consumers tend to consume high levels of electricity, requiring expensive high-capacity connections, and can generally afford to pay full connection costs in addition to contributing towards the subsidisation of low- consumption households.
”South Africa is renowned as one of the cheapest providers of electricity in the world, but the majority of its inhabitants still do not believe it is cheap in real terms,” the regulator adds.