City Power implement new tariff system to ease pressure on national grid

Posted On Tuesday, 24 February 2015 16:12 Published by
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City Power is set to implement a residential time-of-use tariff system that will allow the utility to price electricity at different rates during the day.

Parks Tau

This is aimed at encouraging consumption during off peak hours to reduce the cost to supply and lessen the pressure on the national grid. The system, which has been approved by the National Electricity Regulator of South Africa (NERSA), will now also be available to residential users effective from 1 July. City Power Managing Director Sicelo Xulu said the introduction of the time-of-use tariff is indicative of City Power’s commitment to help augment the security of supply and provide a means by which much-needed savings to consumers can be realised.

“City Power’s introduction of a time-based tariff system is informed by its commitment to provide services to its hard-pressed consumers by incentivising and rewarding them for changing their usage patterns, while at the same time ensuring security of supply by lessening the pressure on the grid. “Load shedding is a fact of life that we have to contend with for the foreseeable future and we need to explore any conceivable solutions to ensure that we keep the lights on,” he said.

Xulu said the time-of-use tariff system is designed to help the customers to reap noticeable savings, provided they amend their usage patterns. He said the spike during peak times is largely caused by hot water consumption and cooking by residential customers between 5:30pm and 8:30pm “These evening demand peaks are very expensive for City Power to deal with and are often the cause of overloads and outages.

“The high cost of servicing the demand for power during peak periods is ultimately passed on to the consumer, so any reduction during the peak period from 5pm to 9pm typically is of mutual benefit to the consumer, City Power and Eskom generation,” he said. With the winter season around the corner, Xulu said the use of electric heaters will add even more to the peak demand.

“As a distributor, this surge in demand causes local network overloads and outages and puts an unbearable strain on Eskom’s capacity to generate electricity, which often leads to load shedding.  “The introduction of a residential time-of-use tariff will go a long way towards mitigating against this ever-present risk,” he said. City Power spokesperson Hloni Motloung said the objective is to improve the continuity of supply and pass the savings on to consumers. He said this time differentiated system was previously made available to large power users.

Time differentiated pricing

 In terms of this regulated pricing strategy, City Power will charge for consumption of electricity at a low tariff during off-peak hours and at a regulated premium during peak periods.  The peak period falls on weekdays between 7am and 10am and 6pm and 9pm.

 Through the implementation of this system, City Power and the City of Johannesburg seek to safeguard security of supply by driving heavy use of power to off-peak periods. The off-peak price will be lower than what the current flat rates are, which will provide an incentive to consumers for using electricity during off-peak periods when tariffs are lower.

This programme allows City Power to remotely and automatically switch off geysers during the peak periods to reduce consumption instead of expecting consumers to do this manually each day. Customers that migrate to the time-of-use tariff are also free to choose which appliances they will refrain from using during the peak period. If they would rather use them during off-peak times, they will also benefit by reducing the daily cost of operating the appliances.

Xulu said an extensive drive will be undertaken to educate consumers about the new system before it is implemented on 1 July. However, City Power has to complete the rollout of smart meters around Johannesburg before it can implement the new system. Eskom is expected to increase its tariffs by more than 8% in the next four years in order to fund its infrastructure backlog. 

Last modified on Tuesday, 24 February 2015 16:49

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