Eskom’s residential customers might soon be charged according to the time of day, if a new electricity tariff is implemented. The new tariff will make electricity more expensive from 7am to 10am and from 6pm to 8pm and cheaper outside these periods.
Time-of-use tariffs encourage customers to switch consumption to off-peak periods and reduce demand at peak times, reducing the likelihood of a power outage. These tariffs are available to large consumers already but, until now, residential consumers have been charged a flat rate, known as homepower.
Homeflex, the new tariff, could be rolled out to 120 000 suburban customers once it has been approved by the Eskom board and the national energy regulator, Nersa. Although no date has been set for the implementation, Eskom has piloted the tariff already and it might be introduced as soon as next year, initially on a voluntary basis.
While residential customers consume 18,3% of overall electricity, during peak periods this jumps to about 32%, said Eskom spokesperson Sipho Neke. If Eskom can persuade consumers to save electricity during peak periods it will take pressure off its overloaded generation capacity and help prevent load-shedding.
Smart metering solutions will be used to monitor customers’ geysers and to measure the time of day. These are intelligent devices that will be wired to the geyser and to non-essential home appliances and which can shift their use into less-expensive off-peak periods using cellular technology, Eskom said. Another benefit of smart meters is that accurate electricity readings can be obtained remotely, without having to access the property. Funding for these meters could come from the Demand Side Management programme.
“The Homeflex tariff is designed to ensure that the average suburban customer pays the same when compared with the current flat rate, residential tariff,” Eskom said. It said the average customer typically consumes 80% of electricity during off-peak periods and 20% of electricity during peak periods.
“If customers shift usage out of peak periods they will save on their electricity bill. Higher-consumption households can shift the use of non-essential appliances, such as geysers, washing machines, tumble dryers, swimming pool pumps and geysers, to off-peak periods without inconveniencing the household,” the utility said.
Eskom’s document, Strategic ÂPricing Direction for Standard ÂTariffs, states that tariffs will contain “cost-reflective signals that promote economic efficiency and sustainability”. Time-of-use tariffs encourage customers to shift their electricity useage away from peak periods to promote the efficiency and sustainability Eskom is looking for. “The chargeable components that make up the tariff must reflect the nature of the costs,” the document states.
From April 1 Eskom will base all tariff rates on the latest cost-of-supply study and will remove a conversion surcharge for customers converting to the existing time-of-use tariffs — Megaflex, Miniflex and Ruralflex — although residential customers will not be affected yet.
Nelson Mandela Bay Municipality has already approved a time-of-use tariff for its residential customers. George Ferreira, the head of energy at the municipality, said this was because a time-of-use tariff appeared to be the only long-term way to persuade customers to use electricity efficiently and appropriately. The municipality hopes to introduce the tariff on a voluntary basis from July 1.
As with Eskom’s Homeflex tariff, the municipal tariff divides the day into peak and off-peak periods and charges more for electricity in winter. Customers who cut down peak usage will save money. Those whose consumption remains the same should not see a difference in price, because the impact of the tariff was planned to be revenue-neutral.
But neither Eskom nor the municipality plans to offer a lower price to residential consumers for night-time, off-peak electricity use. Power companies usually have spare capacity at night and can offer this energy cheaply to customers. Eskom’s Nightsave tariff, available for large consumers, offers this reduced rate to industry.
Internationally there is a precedent for offering lower night-time rates to residential customers. In the United Kingdom consumers use timer switches on appliances and storage heaters to take advantage of Economy 7, the rate for electricity that applies between 12.30am and 7.30am, according to Wikipedia. A nightly data signal sent on the BBC4 frequency activates the switch to Economy 7. Consumers can choose whether to switch their entire electricity supply — which would attract a higher day-time rate — or only the storage heater circuit. Normal rate electricity could be as much as 7p a kilowatt, while Economy 7’s daytime rate might be 7,5p a kilowatt, but the night-time rate could be as low as 2,8p a kilowatt.
Canada’s Ontario province introduced time-of-use tariffs last year, offering three tiers of pricing. In winter on-peak is defined as morning and early evening, mid-peak as midday to late afternoon and off-peak as night-time. In summer the on-peak and mid-peak periods are reversed as air-conditioning drives demand, according to Wikipedia.