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2024 update: Municipal water & electricity tariff increases vs inflation since 1996

by Sean Moolman

0

In 2021, we published an analysis of municipal water & electricity tariff increases compared to inflation since 1996.

That analysis revealed a shocking reality: the average price of both water & electricity across the four largest South African municipalities increased about four times faster than inflation.

This was a sad state of affairs in a country where a large part of the population lives in poverty.

The question is: have things improved or deteriorated further since 2021?

To answer this question, we have updated the analysis with data up to 2024. The result is shown in the graph below.

Note: The graph depicts overall average increases for residential consumers – actual increases will be different for different types of consumers (residential, commercial and industrial) and will vary between municipalities.

Looking at the graph, the following can be noted:

Both water and electricity tariffs have increased dramatically faster than inflation over the period 1996 to 2024.
In fact, water tariffs have increased even faster than electricity tariffs, despite the electricity tariff increases receiving a lot more negative attention from the press and consumers.
Over the period 1996 to 2024, electricity tariffs increased almost 5 times faster than inflation and water tariffs increased almost 6 times faster than inflation.

The unfortunate conclusion is that the unsustainable trend of much higher than inflation increases in the price of water & electricity by municipalities has continued over the past three years.

This is despite continued deterioration in municipal water & electricity infrastructure, leading to an increase in local power failures and water supply disruptions.

Sources:

See our previous article for methods, assumptions and references: The Price of Water and Electricity in South Africa: A Tale of Two Tragedies.

2024 update: Eskom tariff increases vs inflation since 1988 (with projections to 2026)

10Aug

by Sean Moolman

0

In 2015, 2017, 2019 and 2022 we published infographics showing Eskom annual tariff increases since 1988 compared to inflation.

Eskom tariffs increased by an eye-watering 18.7% in 2023 and again by a painful 12.7% in 2024. This compares to CPI (Consumer Price Index) increases of 5.9% and 4.9% over the same two-year period.

The graph below shows the Eskom tariffs from 1988 to 2024, plotted against CPI (Consumer Price Index) or inflation over the same period. It also shows projections up to 2026, based on inflation projections and Eskom’s planned applications to NERSA (and assuming NERSA only grants half their requested increase of 36.15% for 2025).

Note: The graph depicts overall average increases – actual increases will be different for different types of consumers (residential, commercial and industrial) and will vary between municipalities.

Looking at the graph, the following can be noted:

In the period from 1988 up to the 2008 electricity crisis, electricity tariff increases did not keep tread with inflation. This was partly due to government policy to keep electricity tariffs as low as possible for poor communities, but also due to Eskom having an oversupply of electricity (in the 1990’s) and not investing in new capacity (in the 2000’s).
Between 1988 and 2007, electricity tariffs increased by 223%, whilst inflation over this period was 335%.
From the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2024, electricity tariffs increased by 937%, whilst inflation over this period was 155%. Thus, electricity tariffs increased six-fold (or SIX times faster than inflation) in real money terms in 16 years.

Eskom plans to apply for another 36.15% increase in 2025, so unfortunately it seems the dramatic increases in electricity prices are likely to continue.

Sources:

Eskom tariffs and charges. Website: https://www.eskom.co.za/CustomerCare/TariffsAndCharges/Pages/Tariffs_And_Charges.aspx. Last accessed: 2024/08/10.
Stats SA. CPI History. Website: http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?. Last accessed: 2019/10/01.
Bureau for Economic Research. Inflation Expectations – History (2021). Website: https://www.ber.ac.za/BER%20Documents/Inflation-Expectations/?doctypeid=1065. Last accessed: 2021/07/30.
South Africa Inflation Expectations. Website: https://www.resbank.co.za/content/dam/sarb/publications/statements/monetary-policy-statements/2024/january/Statement%20of%20the%20Monetary%20Policy%20Committee%20January%202024.pdf. Last accessed: 2024/08/10.

Image of power lines by Martin Vorel on Libreshot.

2024 update: What does a shower cost in South Africa?

10Aug

by Sean Moolman

0

With the rapid increases in the price of electricity and water over the past decade, the question is: what does a shower or bath cost in South Africa in 2024?

Most South Africans are aware of the rapidly rising price of electricity (a 937% increase over the period 2007-2024), but the price of water has also been increasing rapidly over the same period.

In fact, the rate of water price increases exceeds that of electricity. (For the full story, see our blog post The Price of Water and Electricity in South Africa: A Tale of Two Tragedies and our 2024 updated analysis.)

South Africans tend not to think twice about the cost of a shower or bath, since both electricity and water used to be very inexpensive.

Is this still true in 2024? Our previous studies in 2022 and earlier were real eye-openers, with the cost of a 10-minute shower using a 15 litre/min showerhead coming to just over R21/shower!

We have now updated the study using the latest approved municipal tariffs for the tariff year July 2024 to June 2025. As you might guess, things look worse than they did last year.

Here is the summary data for 2024 to 2025.

For an average middle-class household in South Africa (LSM7-10), a 10-min shower costs over R24 if you have a ‘standard’ 15 litre/min showerhead! This is about R2.43/min. By changing to a low-flow showerhead and reducing shower time to 6 minutes, you can dramatically reduce this to about R7.78 per shower (or R1.30/min).

In either case, it appears that the days of ‘cheap’ showers are numbered, and we can all do with being more aware of just how much water & electricity we use in the shower or bath.

Conventional wisdom has it that showering uses less water than running a bath. However, a typical bath uses 90 litres of water, so if you shower for longer than 6 minutes with a ‘standard’ showerhead, you will actually use more water than if you had a bath… With an average shower time internationally of 8 minutes, a shallow bath might actually be better for your pocket and the environment!

Of course, even better than a shallow bath is to switch to a low flow showerhead and have shorter showers… During the ‘Day Zero’ water crisis, City of Cape Town recommended showering for less than 2 minutes, and switching to low-flow showerheads (less than 10 litres/min) is compulsory according to City of Cape Town bylaws.

The graphs below show more detailed information on water & energy use and cost per shower for normal & low-flow showerheads, and compared to a ‘standard’ 90 litre bath.

Photo of shower head by Ginger Hendee on Unsplash.

References, methodology & assumptions for calculations

Shower & bath temperature of 40°C. See e.g. Lawrence JC & Bull JP. 1976. Thermal conditions which cause skin burns. Engineering in Medicine 5(3):61-63.
Average residential water consumption data was obtained from: Viljoen N. 2016. Presentation: City of Cape Town Residential Water Consumption Trend Analysis 2014/15. Last accessed: 21/08/2017.
Average residential electricity consumption data was obtained from: Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Last accessed: 21/08/2017.
Average bath uses about 90 litres of water. Waterwise. Last accessed: 12/09/2017.
“Normal” or standard showerheads use 15 litres of water per minute or more, and low flow showerheads use about 8 litres water per minute. Eskom fact sheet on showerheads. Last accessed: 12/09/2017.
Average effective residential water & electricity tariffs were calculated from the published 2024/25 tariffs of the following four metropolitan municipalities: City of Johannesburg, City of Tshwane, City of Cape Town and Ethekwini, using the average residential water and electricity consumption values for LSM7-10 obtained from the above references.
For ‘low income’ households, the average marginal water tariff is somewhat lower across the four municipalities (due to lower average consumption), at R2.63/kWh for electricity and R47.24/kilolitre for water & sanitation. This yields a cost per bath of R11.11, a cost per 10-minute ‘normal showerhead’ shower of R18.52/shower, and a cost per 6-minute low-flow showerhead shower of R5.93/shower.
Energy cost of hot water based on heating water from 15 to 60°C, which requires approximately 5.22 kWh per 100 litre.
A study by the Alliance for Water Efficiency also found a shallow bath to be better than a long shower with a high flow showerhead.
Average shower time: a recent study at a South African university found an average shower time of over 9 minutes.

2022 update: What does a shower cost in South Africa?

20Oct

by Sean Moolman

0

With the rapid increases in the price of electricity and water over the past decade, the question is: what does a shower or bath cost in South Africa in 2022?

Most South Africans are aware of the rapidly rising price of electricity (a 650% increase over the period 2007-2022), but the price of water has also been increasing rapidly over the same period.

In fact, the scale of the water price increases matches that of electricity. (For the full story, see our blog post The Price of Water and Electricity in South Africa: A Tale of Two Tragedies.)

South Africans tend not to think twice about the cost of a shower or bath, since both electricity and water used to be very inexpensive.

Is this still true in 2022? Our previous study in 2021 was a real eye-opener, with the cost of a 10-minute shower using a 15 litre/min showerhead coming to just under R20/shower!

We have now updated the study using the latest approved municipal tariffs for the tariff year July 2022 to June 2023. As you might guess, things look worse than they did last year.

Here is the summary data for 2022 to 2023.

For an average middle-class household in South Africa (LSM7-10), a 10-min shower costs over R21 if you have a ‘standard’ 15 litre/min showerhead! This is about R2.10/min. By changing to a low-flow showerhead and reducing shower time to 6 minutes, you can dramatically reduce this to about R6.70 per shower (or R1.12/min).

In either case, it appears that the days of ‘cheap’ showers are numbered, and we can all do with being more aware of just how much water & electricity we use in the shower or bath.

Conventional wisdom has it that showering uses less water than running a bath. However, a typical bath uses 90 litres of water, so if you shower for longer than 6 minutes with a ‘standard’ showerhead, you will actually use more water than if you had a bath… With an average shower time internationally of 8 minutes, a shallow bath might actually be better for your pocket and the environment!

Of course, even better than a shallow bath is to switch to a low flow showerhead and have shorter showers… City of Cape Town recommends showering for less than 2 minutes, and switching to low-flow showerheads (less than 10 litres/min) is compulsory according to City of Cape Town bylaws.

The graphs below show more detailed information on water & energy use and cost per shower for normal & low-flow showerheads, and compared to a ‘standard’ 90 litre bath.

Photo of shower head by Ginger Hendee on Unsplash.

References, methodology & assumptions for calculations

Shower & bath temperature of 40°C. See e.g. Lawrence JC & Bull JP. 1976. Thermal conditions which cause skin burns. Engineering in Medicine 5(3):61-63.
Average residential water consumption data was obtained from: Viljoen N. 2016. Presentation: City of Cape Town Residential Water Consumption Trend Analysis 2014/15. Last accessed: 21/08/2017.
Average residential electricity consumption data was obtained from: Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Last accessed: 21/08/2017.
Average bath uses about 90 litres of water. Waterwise. Last accessed: 12/09/2017.
“Normal” or standard showerheads use 15 litres of water per minute or more, and low flow showerheads use about 8 litres water per minute. Eskom fact sheet on showerheads. Last accessed: 12/09/2017.
Average effective residential water & electricity tariffs were calculated from the published 2022/23 tariffs of the following four metropolitan municipalities: City of Johannesburg, City of Tshwane, City of Cape Town and Ethekwini, using the average residential water and electricity consumption values for LSM7-10 obtained from the above references.
For ‘lower income’ households, the average water & electricity tariffs are somewhat lower across the four municipalities (due to lower average consumption), at R2.57/kWh for electricity and R45.30/kilolitre for water & sanitation. This yields a cost per bath of R10.78, a cost per 10-minute ‘normal showerhead’ shower of R17.97/shower, and a cost per 6-minute low-flow showerhead shower of R5.75/shower.
Energy cost of hot water based on heating water from 15 to 60°C, which requires approximately 5.22 kWh per 100 litre.
A study by the Alliance for Water Efficiency also found a shallow bath to be better than a long shower with a high flow showerhead.
Average shower time: a recent study at a South African university found an average shower time of over 9 minutes.

2021 update: What does a shower cost in South Africa?

15Aug

by Sean Moolman

0

With the rapid increases in the price of electricity and water over the past decade, the question is: what does a shower or bath cost in South Africa in 2021?

Most South Africans are aware of the rapidly rising price of electricity (a 650% increase over the period 2007-2022), but the price of water has also been increasing rapidly over the same period.

In fact, the scale of the water price increases match that of electricity. (For the full story, see our blog post The Price of Water and Electricity in South Africa: A Tale of Two Tragedies.)

South Africans tend not to think twice about the cost of a shower or bath, since both electricity and water used to be very inexpensive.

Is this still true in 2021? Our previous study in 2017 was a real eye-opener, with the cost of a 10-minute shower using a 15 litre/min showerhead coming to just under R13/shower.

We have now updated the study using the latest approved municipal tariffs for the tariff year July 2021 to June 2022. Unfortunately things have only gotten worse…

Here is the summary data for 2021.

For an average middle-class household in South Africa (LSM7-10), a 10-min shower costs almost R20 if you have a ‘standard’ 15 litre/min showerhead! This is about R1.95/min. By changing to a low-flow showerhead and reducing shower time to 6 minutes, you can dramatically reduce this to just over R6 per shower (or R1.04/min).

In either case, it appears that the days of ‘cheap’ showers are numbered, and we can all do with being more aware of just how much water & electricity we use in the shower or bath.

Conventional wisdom has it that showering uses less water than running a bath. However, a typical bath uses 90 litres of water, so if you shower for longer than 6 minutes with a ‘standard’ showerhead, you will actually use more water than if you had a bath… With an average shower time internationally of 8 minutes, a shallow bath might actually be better for your pocket and the environment!

Of course, even better than a shallow bath is to switch to a low flow showerhead and have shorter showers… City of Cape Town recommends showering for less than 2 minutes, and switching to low-flow showerheads (less than 10 litres/min) is compulsory according to City of Cape Town bylaws.

The graphs below show more detailed information on water & energy use and cost per shower for normal & low-flow showerheads, and compared to a ‘standard’ 90 litre bath.

Photo of shower head by Nicole-Koehler on Wikimedia Commons. Photo was edited and is used under the CC-BY-SA-3.0 license.

References, methodology & assumptions for calculations

Shower & bath temperature of 40°C. See e.g. Lawrence JC & Bull JP. 1976. Thermal conditions which cause skin burns. Engineering in Medicine 5(3):61-63.
Average residential water consumption data was obtained from: Viljoen N. 2016. Presentation: City of Cape Town Residential Water Consumption Trend Analysis 2014/15. Last accessed: 21/08/2017.
Average residential electricity consumption data was obtained from: Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Last accessed: 21/08/2017.
Average bath uses about 90 litres of water. Waterwise. Last accessed: 12/09/2017.
“Normal” or standard showerheads use 15 litres of water per minute or more, and low flow showerheads use about 8 litres water per minute. Eskom fact sheet on showerheads. Last accessed: 12/09/2017.
Average effective residential water & electricity tariffs were calculated from the published 2021/22 tariffs of the following four metropolitan municipalities: City of Johannesburg, City of Tshwane, City of Cape Town and Ethekwini, using the average residential water and electricity consumption values for LSM7-10 obtained from the above references.
For ‘lower income’ households, the average water & electricity tariffs are somewhat lower across the four municipalities (due to lower average consumption), at R2.37/kWh for electricity and R37.88/kilolitre for water & sanitation. This yields a cost per bath of R9.59, a cost per 10-minute ‘normal showerhead’ shower of R15.98/shower, and a cost per 6-minute low-flow showerhead shower of R5.11/shower.
Energy cost of hot water based on heating water from 15 to 60°C, which requires approximately 5.22 kWh per 100 litre.
A study by the Alliance for Water Efficiency also found a shallow bath to be better than a long shower with a high flow showerhead.
Average shower time: a recent study at a South African university found an average shower time of over 9 minutes.

2022 update: Eskom tariff increases vs inflation since 1988 (with projections to 2024)

01Aug

by Sean Moolman

2

In 2015, 2017 and 2019 we published infographics showing Eskom annual tariff increases since 1988 compared to inflation.

Following Eskom’s court order success against NERSA in early 2021, it increased electricity prices by an average of 15.63% in April 2021. In April 2022, a further increase of 9.61% was approved. So what do the numbers look like today?

The graph below shows the Eskom tariffs from 1988 to 2022, plotted against CPI (Consumer Price Index) or inflation over the same period. It also shows projections up to 2024, based on expert forecasts and inflation projections.

Note: The graph depicts overall average increases – actual increases will be different for different types of consumers (residential, commercial and industrial) and will vary between municipalities.

Looking at the graph, the following can be noted:

In the period from 1988 up to the 2008 electricity crisis, electricity tariff increases did not keep tread with inflation. This was partly due to government policy to keep electricity tariffs as low as possible for poor communities, but also due to Eskom having an oversupply of electricity (in the 1990’s) and not investing in new capacity (in the 2000’s).
Between 1988 and 2007, electricity tariffs increased by 223%, whilst inflation over this period was 335%.
From the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2022, electricity tariffs increased by 653%, whilst inflation over this period was 129%. Thus, electricity tariffs increased four-fold (or quadrupled) in real money terms in 14 years.

Considering the current serious state of Eskom’s debt and the fact that the country probably cannot afford for Eskom to fail, consumers can likely expect a continuance of much higher than inflation electricity price increases over the next several years.

In fact, Eskom has already applied to NERSA for a 32% tariff increase in April 2023. It has also applied to NERSA to restructure residential tariffs to ‘reflect cost drivers more accurately’. The restructured tariffs will see two main options for direct Eskom customers – Homepower and Homeflex.

For the Homepower tariff, the grid connection fee would increase from R218/month to R938/month – this is the charge before you have used a single kWh of electricity!

The Homeflex tariff will introduce time-of-use charges – in other words, the price of electricity will change depending on the time of day. (Time-of-use charges is widespread internationally, and helps to balance grid load by incentivising electricity use outside of peak hours.)

Eskom is in serious need of restructuring – which the government at last acknowledged and announced in 2019. As of October 2022 this restructuring has not yet been completed, but is in progress.

Sources:

Eskom warned its pricing itself out of the market. Website: https://techcentral.co.za/eskom-warned-its-pricing-itself-out-of-the-market/105167/. Last accessed: 2021/07/30.
Eskom tariffs and charges. Website: https://www.eskom.co.za/CustomerCare/TariffsAndCharges/Pages/Tariffs_And_Charges.aspx. Last accessed: 2022/10/20.
Stats SA. CPI History. Website: http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?. Last accessed: 2019/10/01.
Bureau for Economic Research. Inflation Expectations – History (2021). Website: https://www.ber.ac.za/BER%20Documents/Inflation-Expectations/?doctypeid=1065. Last accessed: 2021/07/30.
South Africa Inflation Expectations. Website: https://tradingeconomics.com/south-africa/inflation-expectations. Last accessed: 2022/10/20.

Image of Lethabo power station by Simisa on Wikimedia Commons [CC BY-SA 3.0]

The Price of Water and Electricity in South Africa: A Tale of Two Tragedies

18Jan

by Sean Moolman

2

Authors: Matthew Capes, Sean Moolman

Background

This article seeks to examine the price and affordability of water and electricity in South Africa. We embark on a tough but important journey to shed light on how the price of electricity and water has changed over the last 25 years, and how these basic needs have become less affordable for us, the citizens of South Africa.

On this journey, we discuss the following topics in 5 short chapters (click the link to go directly to a specific chapter):

The increase in Eskom’s average electricity tariff vs. inflation (CPI) – click here to read
The increase in the average municipal water and sanitation tariff for three different income levels vs. inflation (CPI) – click here to read
The contrast between the increases in South African electricity and water tariffs vs. inflation (CPI) – click here to read
How South Africans’ monthly electricity and water bills have changed in the past 25 years in both nominal and current money – click here to read
The combined electricity and water bill of an average South African household vs. average household disposable income in South Africa – click here to read

Each of the above topics is accompanied by a graph to aid the discussion and illustrate the seriousness of the situation in South Africa.

We hope to highlight the pertinence of wise water usage and efficient energy consumption and to stimulate the conversation surrounding what we could and should do to ensure sustainable and affordable access to these basic needs for all South African citizens.

For methods, assumptions and references, click here.

Chapter 1. Eskom average tariff vs. inflation (CPI)

The state of South Africa’s electricity provider, Eskom, is no secret. Plagued by ageing infrastructure, mismanagement, corruption, shrinking or stagnant revenues and increasing debt, the state-owned utility is caught in what is known as a ‘death spiral’.

The impact of these issues manifests in two ways. The first is known as load-shedding, something with which we as South Africans have become all too familiar. The second is the infamous Eskom electricity tariff increases. Ideally these tariff increases would be somewhat in line with increases in inflation… Oh what a perfect world that would be!

In sunny South Africa, electricity tariffs have increased by 512% from 2007 to 2020 (see the graph). That is 5 times faster than inflation! Eishkom?

To top it all off, Eskom was recently granted a R13 billion clawback by NERSA, as well as an additional R69 billion clawback, resulting from a court judgement in Eskom’s favour[a].

What does that mean for us? We, the citizens of South Africa, are set to experience further rapid electricity bill escalations over the next few years. It goes without saying that those increases will not be accompanied by improved service delivery.

Speaking of rapid escalations, has anyone kept an eye on their water bill? In the next chapter we take a closer look at municipal water tariffs.

Chapter 2. Average municipal water & sanitation tariff vs. inflation (CPI)

In the previous chapter we discussed the 512% increase in the average Eskom electricity tariff since 2007. We shall now embark on the 2nd leg of our journey in which we highlight an equally odious development in a tariff that has received a lot less negative press: Water and sanitation.

You are not alone if you allowed the increasing cost of your most basic need to go unnoticed…

Perhaps now is the time to explore the real water tariff trends, overshadowed by Eskom’s conspicuous plight and camouflaged by a complicated tariff structure, but which impacts our daily lives as South African citizens. Think back to ‘Day Zero’ in 2018 and the questions surrounding a lack of access to water and water insecurity in South Africa.

Now ask yourself this: Is it possible that the cost of the water provided by municipalities has increased faster than inflation, considering the deteriorating service delivery on a broader scale?

As can be seen in the graph, average municipal water tariffs have increased four times faster than inflation since 1996.

Essentially, the average municipal water tariff was almost 1300% higher in 2020 than in 1996… Unfortunately, we must bear this burden together with that of Eskom’s runaway tariffs.

In the next chapter, we compare electricity and water & sanitation tariffs over the past 25 years and consider why the increases in average municipal water tariffs have gone largely unnoticed.

Chapter 3. South African electricity and water tariffs vs. inflation (CPI)

In the previous chapter, we highlighted the dizzying increases in average municipal water tariffs since 1996. The numbers are startling to say the least, which begs us to ask: how could such exorbitant increases happen right under our noses without a public outcry?

The bulk of negative public attention and sentiment has been aimed at Eskom… Rightfully so, however, it may have distracted us from an equally pressing issue.

Water tariffs (1270%) have increased even faster than electricity tariffs (1120%) over the past 25 years (1996 to 2020).

But we have an excuse for our ignorance, for these staggering municipal water tariff increases are cloaked by more than Eskom’s shadow.

To begin with, our water tariffs appear as only one component in a larger municipal bill and are thus hidden in the details. Furthermore, every municipality sets its own water tariffs and structures them in a more complicated way than residential electricity tariffs. This tariff structure is known as block tariffs, where the price per unit of water increases in blocks as usage increases.

Consequently, it is more difficult for people to make direct comparisons and to know the real cost of each unit of water.

Our journey to unearth the truth would be incomplete without investigating the real monetary impact of these increases. How has the price of water and electricity changed over the past 25 years in current money terms? In the next chapter, we illustrate and discuss how these increases have affected our monthly electricity and water bills in both nominal and current money.

Chapter 4. South African monthly electricity and water bills 1996 to 2021 (nominal and current money)

Electricity and water tariff trends in South Africa were explored in the previous articles in this series. But this would be rather meaningless without highlighting how this translates into the monthly electricity and water bills of the average South African.

What was the monthly water and electricity bill 25 years ago compared to what we are paying today?

Not accounting for inflation, the average monthly electricity and water bill for lower to middle income families was a mere total of R161 in 1996. Fast forward to 2020 and this average monthly electricity and water bill has ballooned to R2 028!

The question you should now be asking is: “how much of that increase was due to inflation”?

As I am sure you would have guessed, the answer is not much. The next graph tells the story.

Essentially, this graph tells us that in 1996 the average electricity and water bill was R638 in today’s money. A stark contrast to the R2 028 average monthly electricity and water bill in 2020.

These prices have been adjusted for inflation and so the increases seen in the above graph are entirely the result of above-inflation tariff increases implemented by Eskom and local municipalities.

An over-arching question remains: Can we afford these exponential increases in the cost of two of our most basic needs?

We will answer this important question in the final leg of our journey, in which we compare the average electricity and water bills to the average household disposable income in South Africa over the past 25 years.

Chapter 5. Electricity & water bill vs average household disposable income in South Africa

The final leg of our journey is arguably the most pertinent. We know for certain that inflation is not the major cause of the increases in electricity and water tariffs. But the real question is: Can we afford these spiralling electricity and water bills? Did South Africans’ average income keep pace?

Looking at the above graph, the conclusion must be a deafening no. While our average monthly electricity and water bills have increased by 200% since 1996, our average household disposable income[b] has increased by a mere 37% since 1996.

The divergence between these basic costs and household income is especially pronounced from 2008 onward (the past 12 years). Furthermore, our disposable income has been impacted by economic downturns and, more recently, rising income tax rates.

Two of our basic needs have become increasingly unaffordable and we continue to struggle with load-shedding. Now more than ever, we need to take practical steps to explore alternative solutions.

Although the current outlook is bleak, there is hope on the horizon. In October 2020, the Department of Mineral Resources and Energy gazetted amendments to the electricity regulations, allowing municipalities to generate and procure their own electricity. South Africa has some of the best solar PV and wind resources in the world and the cost of these options continues to fall, making self-generation as well as the renewable aspirations of the Integrated Resource Plan (IRP) more viable every day.

Appendix A. Methods & assumptions

Average electricity consumption data for different LSM (Living Standards Measure) categories was obtained from Reference [1]. LSM 1 to 4 were classified as low income, LSM 5-6 were classified as lower to middle income and LSM 7-10 were classified as middle to upper income.
Average water consumption data for low, middle & high income households was obtained from References [2] and [3]. It was assumed that water consumption remained constant over time, although it is possible that it has reduced somewhat over the years due to increasing prices and water restrictions. However, the data in the references used ranged from 2004 to 2015 and water consumption was relatively constant over this period.
Eskom electricity tariff data were obtained from its website [4].
The Consumer Price Index (CPI) was used as inflation measure. CPI data was obtained from References [5], [6] and [7].
Municipal electricity and water & sanitation tariff data for the four metropolitan municipalities Cape Town, Johannesburg, Tshwane and eThekwini were obtained from their respective websites [8], [9], [10] and [11], as well as third-party reports [12].
Where water restrictions were in place and water restriction levels changed during the course of a municipal year (such as in Tshwane or Cape Town), the tariffs for the water restriction level that was in place for most of the year was used to calculate the average tariffs for the different income levels.
Tariffs for all income group were calculated based on the ‘single dwelling houses’ category and not for apartment buildings.
‘Indigent’ tariffs were not applied in calculation of the average tariffs for the lower income group (in other words, this group is not representative of the ‘lowest’ income group, but rather the ‘lower’ income group).
All tariffs are VAT inclusive.
All tariffs are metered tariffs (as opposed to prepaid tariffs). However, for most municipalities and in most years metered & prepaid tariffs are structured the same.
For the period 1996 to 2002, the water tariff data obtained excluded sanitation tariffs. The sanitation tariffs for this period for each of the four metro municipalities (Cape Town, Johannesburg, Tshwane and eThekwini) were estimated using the respective municipality’s average sanitation tariff as % of total water & sanitation tariff for later years for which full data was available.
Disposable income data was obtained from Reference [13].
No water & sanitation tariff data could be obtained for the four-year period 2003 to 2006. For this period, linear interpolation was done between the 2002 and 2007 tariffs for each municipality.
Average tariffs across the four metro municipalities in the study (Cape Town, Johannesburg, Tshwane and eThekwini) were calculated as simple averages (in other words, not weighted by measures such as population size).

Appendix B. References

[a] https://www.engineeringnews.co.za/article/eskom-says-it-needs-r23bn-more-from-tariffs-in-2021-to-remain-a-going-concern-2020-11-05

[b] ‘Disposable income’ is defined as the total income after tax (in other words before expenses), not income after expenses.

[1]. Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Website: http://www.competition.org.za/s/Parallel-3B_Goliger-and-Cassim_National-Treasury.pdf. Last accessed: 2017/08/21.

[2]. Viljoen N. 2015. City of Cape Town Residential Water Consumption Trend Analysis 2014/2015. Website: https://greencape.co.za/assets/Sector-files/water/Water-conservation-and-demand-management-WCDM/Viljoen-City-of-Cape-Town-residential-water-consumption-trend-analysis-2014-15-2016.pdf. Last accessed: 2020/08/02.

[3]. Bailey WR, Buckley CA. 2004. Modelling Domestic Water Tariffs. Proceedings of the 2004 Water Institute of Southern Africa (WISA) Biennial Conference. Cape Town, South Africa, 2-6 May 2004. Website: https://wisa.org.za/wp-content/uploads/2018/12/WISA2004-P004.pdf. Last accessed 2020/08/02.

[4]. Eskom Tariff History. Website: http://www.eskom.co.za/CustomerCare/TariffsAndCharges/Pages/Tariff_History.aspx. Last accessed: 2020/08/04.

[5]. Focus Economics. Inflation in South Africa. Website: https://www.focus-economics.com/country-indicator/south-africa/inflation. Last accessed: 2020/08/04.

[6]. Bureau for Economic Research. Inflation Expectations. Website: https://www.ber.ac.za/BER%20Documents/Inflation-Expectations/?doctypeid=1065. Last accessed: 2020/08/04.

[7]. Statistics South Africa. CPI headline inflation history. Website: http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?. Last accessed: 2020/08/04.

[8]. City of Cape Town Tariffs. Web pages:

https://www.capetown.gov.za/Family%20and%20home/residential-utility-services/residential-water-and-sanitation-services/water-and-sanitation-services-and-costs-for-formal-housing.

http://resource.capetown.gov.za/documentcentre/Documents/Forms,%20notices,%20tariffs%20and%20lists/L3-WaterSanitationRestrictionTariffs.pdf

https://resource.capetown.gov.za/cityassets/Files/Tariff_increases_from1July17.pdf

http://resource.capetown.gov.za/documentcentre/Documents/Financial%20documents/Budget%202018-2019%20Annexure%206%20Tariff%20Fees%20and%20Charges%20Book.pdf

https://www.capetown.gov.za/Family%20and%20home/Residential-utility-services/Residential-electricity-services/the-cost-of-electricity

[9]. City of Johannesburg Tariffs. Web pages:

https://www.joburg.org.za/services_/tariffs/Documents/annexure%2020.pdf

https://www.joburg.org.za/Campaigns/Documents/2014%20Documents/2014-15%20approved%20tariffs.pdf

https://www.joburg.org.za/services_/tariffs/Documents/2015-16%20tariffs%20for%20approval.pdf

https://www.joburg.org.za/services_/Documents/rates%20and%20taxes/201617%20APPROVED%20TARIFFS%20FOR%20GAZETTING.pdf

https://www.joburg.org.za/documents_/Documents/Other/traffifs/Approved%20tarrifs.compressed.pdf

https://www.joburg.org.za/services_/Documents/rates%20and%20taxes/2018-19%20APPROVED%20TARIFFS%20FOR%20COJ.pdf

https://www.joburg.org.za/documents_/Pages/Key%20Documents/other/links/tariffs/Tariffs.aspx

[10]. City of Tshwane Tariffs. Web pages:

http://www.tshwane.gov.za/sites/Departments/Financial-Services/Financial-Documents/Pages/Promulgated-Tariffs.aspx

http://www.tshwane.gov.za/sites/Departments/Financial-Services/Financial-Documents/Miscellaneous/Statistics%20and%20Tariff%20Handbook%202012.pdf

http://www.tshwane.gov.za/sites/Departments/Financial-Services/Financial-Documents/Miscellaneous/Statistics%20and%20Tariff%20Handbook%20June%202014.pdf

http://www.tshwane.gov.za/sites/Departments/Financial-Services/Financial-Documents/Pages/Miscellaneous-Documents.aspx

[11]. eThekwini Tariffs. Web pages:

http://www.durban.gov.za/City_Services/water_sanitation/Bylaws_Tariffs/Tariffs/Pages/Sewage_Tariffs.aspx

http://www.durban.gov.za/Resource_Centre/Services_Tariffs/Water%20Tariffs/Forms/AllItems.aspx

http://www.durban.gov.za/City_Services/electricity/Tariffs/Pages/default.aspx

[12]. Third-party websites used as sources for municipal electricity, water & sanitation data:

https://greenaudits.co.za/2016/10/20/high-water-restriction-prices-for-cape-town-dec-2016/

http://www.rrva.net/wp-content/uploads/2011/09/New-Tariffs-and-Rates-for-CoJ-2011-12.pdf

https://www.timeslive.co.za/news/south-africa/2018-05-10-cape-town-explains-water-tariffs-pipe-network-costs-more-than-water/

[13]. South African Reserve Bank data. Website links:

https://www.resbank.co.za/Publications/Detail-Item-View/Pages/Publications.aspx?sarbweb=3b6aa07d-92ab-441f-b7bf-bb7dfb1bedb4&sarblist=21b5222e-7125-4e55-bb65-56fd3333371e&sarbitem=10091

https://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/10091/14Statistical%20tables%20%E2%80%93%20Key%20information.pdf

2019 update: Eskom tariff increases vs inflation since 1988 (with projections to 2022)

25Oct

by Sean Moolman

1

(Click here for a 2022 update to this article)

In 2015 and 2017 we published infographics showing Eskom annual tariff increases since 1988 compared to inflation.

Following NERSA’s approval of a 13.87% average tariff increase in April 2019, what do the numbers look like today?

The graph below shows the Eskom tariffs from 1988 to 2019, plotted against CPI (Consumer Price Index) or inflation over the same period. It also shows projections up to 2022, based on currently projected increases as approved by NERSA (8.1% in 2020 and 5.2% in 2021), as well as Stats SA and the Bureau for Economic Research’s inflation projections.

Note: The graph depicts overall average increases – actual increases will be different for different types of consumers (residential, commercial and industrial) and will vary between municipalities.

Looking at the graph, the following can be noted:

In the period from 1988 up to the 2008 electricity crisis, electricity tariff increases did not keep tread with inflation. This was partly due to government policy to keep electricity tariffs as low as possible for poor communities, but also due to Eskom having an oversupply of electricity (in the 1990’s) and not investing in new capacity (in the 2000’s).
Between 1988 and 2007, electricity tariffs increased by 223%, whilst inflation over this period was 335%.
From the 2008 electricity crisis onwards, there is a clear and sharp inflection point for electricity tariffs in South Africa. From 2007 to 2019, electricity tariffs increased by 446%, whilst inflation over this period was 98%. Thus electricity tariffs increased more than four-fold in 12 years.
Based on the currently approved increases for 2020 and 2021, the total increase in electricity tariffs from 2007 to 2021 will be 520%. By then, electricity tariffs would have increased more than 5-fold in 14 years.

Considering the current serious state of Eskom’s debt and the fact that the country probably cannot afford for Eskom to fail, consumers can likely expect a continuance of much higher than inflation electricity price increases over the next several years. Eskom is in serious need of restructuring, but this is likely to face strong resistance from the trade unions.

Sources:

Noble B. Eskom Annual Price Increase 2019/20. Website: https://powertime.co.za/online/eskom-annual-price-increase-201920/. Last accessed: 2019/10/01.
Eskom tariffs and charges. Website: http://www.eskom.co.za/CustomerCare/TariffsAndCharges/Pages/Tariffs_And_Charges.aspx. Last accessed: 2019/10/01.
Stats SA. CPI History. Website: http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?. Last accessed: 2019/10/01.
Bureau for Economic Research. Inflation Expectations – History (2019). Website: https://www.ber.ac.za/BER%20Documents/Inflation-Expectations/?doctypeid=1065. Last accessed: 2019/10/01.
Merten M. Electricity price goes up — way beyond inflation — as Ramaphosa answers questions on Eskom in the House. Daily Maverick, 2019/03/08. Website: https://www.dailymaverick.co.za/article/2019-03-08-electricity-price-goes-up-way-beyond-inflation-as-ramaphosa-answers-questions-on-eskom-in-the-house/. Last accessed: 2019/10/01.

Image of Arnot power station by Gerhard Roux on Wikimedia Commons [CC BY-SA 4.0]

350% increase in a decade: how expensive is electricity in South Africa compared to other countries?

27Sep

by Sean Moolman

0

Electricity prices in South Africa have dramatically outpaced inflation over the past decade (ever since the 2008 electricity supply shortage crisis). Recently, Eskom has won a court case allowing it to recover historical ‘losses’ or under-recoveries (the so-called regulatory clearing account or RCA).

Please note: we have published an update to this article in 2019 with more recent Eskom price increase data. Please see the article here.

After a brief respite in 2017 (when an increase of only 2.2% was granted by NERSA, the National Energy Regulator of South Africa), Eskom has submitted an application to NERSA for a 19.9% electricity tariff increase in 2018, and might still add additional RCA applications.

We have previously (in 2015) compared Eskom’s electricity price increases to inflation over the period 1988 to 2015, and have decided to update this comparison.

Below is the Eskom tariffs from 1988 to 2017, plotted against CPI (Consumer Price Index) or inflation over the same period. The dotted lines are projections over the next 3 years, based on Eskom’s 19.9% application for 2018, and further increases of 8% in each of 2019 and 2020 (this could be much higher if further RCA recoveries are granted).

Over a period of 10 years, Eskom’s electricity prices have increased by about 356%, whilst inflation over the same period was 74%. This means that electricity prices have increased 4 times faster than inflation over this period. Whilst South Africa had some of the least expensive electricity in the world in the early 2000’s, the question now is: how expensive is electricity in South Africa compared with the rest of the world in 2017?

We decided to investigate. The graph below shows 2017 residential (household) electricity prices for a selection of developed and developing countries in US dollars. South African prices for 2007, 2017 and 2018 (all in 2017 money) are indicated in yellow, and other African countries are indicated in green. (Note: most countries have a range of residential tariffs that vary according to use, location and other factors. The tariffs in the graph are based on a middle-class urban household with consumption of 400 kWh of electricity per month.)

As can be seen from the above graph, whilst South Africa used to be one of the least expensive countries in the world in terms of dollar price of electricity, this is no longer the case. It is now mid-range in terms of electricity price for the countries in the comparison.

Most of the African countries with less expensive electricity than South Africa (such as Botswana, Zambia, Zimbabwe and Ethiopia) have substantial government subsidies. Of course these countries typically also have a much less reliable electricity supply than South Africa.

Also to be noted is the high price of electricity in many developed countries.

However, the above is not the full picture. The typical income of a citizen of each of these countries varies tremendously. This impacts directly on the affordability of electricity in each country.

It is thus more appropriate to look at affordability of electricity as a function of the typical or median income of citizens in order to make a comparison. The below graph shows the cost of 400 kWh/month of electricity as a percentage of the median income per capita in each country (at purchasing power parity). This is a much better indication of relative affordability of electricity in each country. (Note: median income = that income where half of the people earn more and half of the people earn less. This is a better representation of the typical income than the “average” income, since averages are distorted more by extreme values or outliers.)

The following interesting observations can be made from the graph:

Disparities in electricity affordability are larger than only the dollar tariff would indicate – whereas the ratio of highest to lowest dollar tariff is 15, the ratio of highest to lowest relative cost is 75;
Electricity is most affordable in developed countries;
Electricity is least affordable in African countries;
Electricity in South Africa is still relatively more affordable than many other African countries;
Affordability of electricity in South Africa has decreased over the past decade and is continuing to decrease;
Following the possible 19.9% increase in 2018, South Africa’s electricity will be the least affordable of the BRICS countries.

References

Source for exchange rates (as of 27/09/2017): https://www.oanda.com/currency/converter/
Source for median income per capita: https://www.givingwhatwecan.org/post/2016/05/giving-and-global-inequality/
Featured image source: Photo by Thomas Kelley on Unsplash
Sources for electricity prices:
- http://sunmetrix.com/residential-electricity-rates-united-states/
- http://www.hydroquebec.com/publications/en/corporate-documents/comparaison-electricity-prices.html
- http://global-climatescope.org/en/country/mexico/#/details
- http://global-climatescope.org/en/country/chile/#/details and http://www.ees-magazine.com/chile-large-scale-batteries-now-home-storage-later/ and https://www.cne.cl/wp-content/uploads/2016/07/AnuarioCNE2015_vFinal-Ingles.pdf
- http://www.mme.gov.br/documents/1138787/19852880/04+-+Boletim+Mensal+de+Energia+-+Abril+2017+-+Ingl%C3%AAs+%28PDF%29.pdf/78545671-a8da-4b54-b4c3-c423b12f816f
- http://www.enre.gov.ar/web/web.nsf/home?openframeset and http://global-climatescope.org/en/country/argentina/#/details
- http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Disaggregated_electricity_price_data_for_household_consumers,_second_half_2016_YB17.png
- https://www.solarquotes.com.au/blog/south-australia-is-actually-second-cheapest-state-for-household-electricity/
- http://www.theinvestor.co.kr/view.php?ud=20160819000624 and http://asian-power.com/ipp/news/why-kepco-will-be-hurt-koreas-reduced-tariffs
- https://asia.nikkei.com/Business/Trends/Japan-s-gas-electricity-prices-to-rise-again-in-May
- http://global-climatescope.org/en/country/china/#/details
- http://www.hindustantimes.com/india-news/55-increase-in-bihar-power-tariff-from-apr-1/story-uZF2x5pX7xauEysMDGN6aL.html and http://www.thehindubusinessline.com/news/8-power-tariff-hike-for-all-categories-of-consumers-in-karnataka/article9629593.ece and https://cp.tatapower.com/irj/go/km/docs/documents/Public%20Documents/CustomerPortal/pdf/Direct.pdf
- https://www.confusedaboutenergy.co.uk/index.php/household-energy-costs/electricity-cost-calculator
- https://www.naij.com/1108939-new-electricity-tariff-nigeria-2017.html#1108939
- https://stima.regulusweb.com/historic#tariffs
- http://poweroptimal.com/cost-shower-south-africa/
- https://www.bpc.bw/media-site/news/Pages/2017-Tarrifs.aspx
- https://www.esi-africa.com/news/different-power-tariffs-in-among-the-sadc-region-members/
- http://www.monitor.co.ug/News/National/Government-increases-power-tariffs/688334-3502314-69d3fkz/index.html
- https://www.esi-africa.com/news/different-power-tariffs-in-among-the-sadc-region-members/
- http://www.reg.rw/index.php/our-business/customer-services/electricity-tariff
- https://www.esi-africa.com/news/different-power-tariffs-in-among-the-sadc-region-members/
- http://news.xinhuanet.com/english/2017-04/24/c_136232502.htm
- http://ceb.intnet.mu/
- https://www.myjoyonline.com/business/2017/september-27th/reduction-in-electricity-tariff-will-take-effect-in-2018-boakye-agyarko.php
- http://egyptoil-gas.com/news/electricity-ministry-to-announce-new-tariffs/ and http://www.scedc.com.eg/Customer/BC1.aspx

What does a shower cost in South Africa?

10Aug

by Sean Moolman

0

Please note: this article has been updated – click here for the 2021 version.

With the rapid increase in the price of electricity and water over the past few years, the question is: what does a shower or bath cost in South Africa in 2017?

Most South Africans are aware of the rapidly rising price of electricity (a 300% increase in the period 2007-2015 alone), but the price of water has also been increasing rapidly over the past few years.

For example, here are the water & sanitation tariff increases effective July 2017 for the four major metropolitan areas:

Ethekwini 17%
City of Johannesburg 12.2%
City of Tshwane 10.2%
City of Cape Town:
- 13.2% for 6 – 10.5 kl (kilolitres)
- 29.7% for 10.5 – 20 kl
- 27.2% for 20 – 35 kl
- 128.8% for 35 – 50 kl

These increases are all much higher than inflation. All these municipalities have also done away with the free water allocation of 6 000 litres (6 kilolitres), except for people registered as indigent.

Of course, there is a serious drought in Cape Town, and so the increases seen there might be more justifiable.

South Africans tend not to think twice about the cost of a shower or bath, since both electricity and water used to be very inexpensive.

Is this still true in 2017? We did some calculations and the result is an eye-opener.

For an average middle-class household in South Africa (LSM7-10), a 10-min shower costs almost R13 if you have a ‘standard’ 15 litre/min showerhead! This is about R1.30/min. By changing to a low-flow showerhead and reducing shower time to 6 minutes, you can dramatically reduce this to just over R4 per shower (or 70c/min).

In either case, it appears that the days of ‘cheap’ showers are numbered, and we can all do with being more aware of just how much water & electricity we use in the shower or bath.

Conventional wisdom has it that showering uses less water than running a bath. However, a typical bath uses 90 litres of water, so if you shower for longer than 6 minutes with a ‘standard’ showerhead, you will actually use more water than if you had a bath… With an average shower time internationally of 8 minutes, a shallow bath might actually be better for your pocket and the environment!

Of course, even better than a shallow bath is to switch to a low flow showerhead and have shorter showers… City of Cape Town recommends showering for less than 2 minutes, and switching to low-flow showerheads (less than 10 litres/min) is compulsory according to City of Cape Town bylaws.

The graphs below show more detailed information on water & energy use and cost per shower for normal & low-flow showerheads, and compared to a ‘standard’ 90 litre bath.

References, methodology & assumptions for calculations

Shower & bath temperature of 40°C. See e.g. Lawrence JC & Bull JP. 1976. Thermal conditions which cause skin burns. Engineering in Medicine 5(3):61-63.
Average residential water consumption data was obtained from: Viljoen N. 2016. Presentation: City of Cape Town Residential Water Consumption Trend Analysis 2014/15. Last accessed: 21/08/2017.
Average residential electricity consumption data was obtained from: Goliger, A. and Cassim, A. (14 and 15 July 2017). Tipping Points: The Impacts of Rising Electricity Tariffs on Households and Household Electricity Demand. 3rd Annual Competition and Economic Regulation (ACER) 2017 Conference, Dar es Salaam, Tanzania. Last accessed: 21/08/2017.
Average bath uses about 90 litres of water. Waterwise. Last accessed: 12/09/2017.
“Normal” or standard showerheads use 15 litres of water per minute or more, and low flow showerheads use about 8 litres water per minute. Eskom fact sheet on showerheads. Last accessed: 12/09/2017.
Average effective residential water & electricity tariffs were calculated from the published 2017/18 tariffs of the following four metropolitan municipalities: City of Johannesburg, City of Tshwane, City of Cape Town and Ethekwini, using the average residential water and electricity consumption values for LSM7-10 obtained from the above references.
For ‘lower income’ households, the average water & electricity tariffs are somewhat lower across the four municipalities (due to lower average consumption), at R1.65/kWh for electricity and R23.47/kilolitre for water & sanitation. This yields a cost per bath of R6.42, a cost per 10-minute ‘normal showerhead’ shower of R10.70/shower, and a cost per 6-minute low-flow showerhead shower of R3.40/shower.
Energy cost of hot water based on heating water from 15 to 60°C, which requires approximately 5.22 kWh per 100 litre.
A study by the Alliance for Water Efficiency also found a shallow bath to be better than a long shower with a high flow showerhead.
Average shower time: a recent study at a South African university found an average shower time of over 9 minutes.

Tag: electricity

2024 update: Municipal water & electricity tariff increases vs inflation since 1996

2024 update: Eskom tariff increases vs inflation since 1988 (with projections to 2026)

2024 update: What does a shower cost in South Africa?

2022 update: What does a shower cost in South Africa?

2021 update: What does a shower cost in South Africa?

2022 update: Eskom tariff increases vs inflation since 1988 (with projections to 2024)