Renewable Energy is the future and SSEG in urban areas has an important role to play. So, how to find a win-win that protects municipal revenue while ensuring an attractive business case to keep residential rooftop PV grid tied? The knee jerk response of ESKOM and several local authorities to reduced electricity sales is to increase tariffs or introduce new ones. Tariffs that result in prosumers (customers who are electricity producers and consumers) going off grid is a loss for all. Municipalities don’t benefit from cheaper and cleaner electricity and SSEG households have the additional cost of batteries.
Each new trip through my city, Cape Town, reveals more rooftop PV. Municipalities are recognising that they need to change too. Investment and revenue protection is the bottom line for the municipalities and for most prosumers. This means that SSEG tariffs have a key role to play.
For a video explanation of how SSEG tariffs should be derived have a look at:
A recommended SSEG tariff structure is:
A monthly or daily 𝒇𝒊𝒙𝒆𝒅 𝒄𝒉𝒂𝒓𝒈𝒆 plus an (𝒆𝒏𝒆𝒓𝒈𝒚𝒄𝒉𝒂𝒓𝒈𝒆 ∗ 𝒌𝑾𝒉 𝒄𝒐𝒏𝒔𝒖𝒎𝒆𝒅) minus an (𝒆𝒙𝒑𝒐𝒓𝒕charge ∗ 𝒌𝑾𝒉 𝒆𝒙𝒑𝒐𝒓𝒕𝒆𝒅)
Fixed charge/ infrastructure fee: Residential electricity customers resent having to pay a fixed fee in addition to the energy / consumption fee. The reality is that the cost of providing and maintaining the electricity distribution infrastructure varies widely between municipalities. Publicly available Cost of Supply studies indicate that costs to the authorities range “ from as low as R350 to as high as R2000 (e.g. for 80A 3-phase connection) per month” (1) These costs were partially recovered from the sale of electricity units. However, as sales drop, either as a result of investments in energy efficiency or in SSEG, a fixed service fee or infrastructure fee is needed to make up the shortfall. “Revenue impact assessments undertaken for a number of municipalities indicate that fixed charges in the range R200-R400 are likely to provide adequate revenue protection.” (1)
For many households in CT with smaller SSEG systems, the fixed charge of about R426 per month was a disincentive to switch to a grid tied system. This disadvantaged the City as households with rooftop PV simply stayed on the standard domestic tariff but bought far less electricity. In acknowledgement of this, the City of Cape Town introduced a SSEG 2 tariff. The table at the end of the article compares the costs of the SSEG 1 and SSEG 2 tariffs at different consumption levels.
Import tariff per cents/kWh (electricity bought by the customer) :
“ It is common practice for SSEG tariffs to maintain the same import kWh tariff as for non-SSEG customers.” (1) In Cape Town all non-subsidized residential tariffs over 600kWh of consumption have the same c/kWh charge. Below 600kWhs of consumption, the energy charge differs when a service fee applies.
Export tariffs per cents/kWh (SSEG electricity sold to the City) :
Many municipalities base this tariff on their average ESKOM bulk kWh purchase rate. This is typically between 70 and 85c/kWh for municipalities.
Ideally all charges making up a tariff should be based on cost of supply. For consumption and export of electricity this should be time based. It is cheaper to produce electricity at midday. However in residential areas consumption peaks early in the morning and late in the evening. Smart Meters that record Time of Use and Time of Generation should be installed as the uptake of residential PV systems increases.
For good background information on how SSEG tariffs should be designed go to:
A new website designed as an info platform for Local Authorities, prosumers, Renewable Energy Installers etc is an up to date and comprehensive resource on SSEG. Go to www.SSEG.org.za.
(1) Information in article is sourced from which provides generalized costing guidelines. https://www.sseg.org.za/wp-content/uploads/2019/07/SSEG-Tariff-Guidelines.pdf
Comparison between SSEG 1 and SSEG 2 at increasing consumption levels. SSEG 2 is designed for smaller systems with benefits in the low consumption ranges.
As range electricity service options changes with Renewable Energy and the needs of consumers diversifies, so it is onerous on all to understand the cost and supply issues. Equally, the authorities and new services providers need to be transparent about the costs of their services and any cross subsidy mechanisms.
“The world-renowned scientist began attempting to decode his electricity bill some months ago, but has now admitted defeat after it proved more far complicated than his work on gravitational singularities. Hawking said: “The bill appears to be based on arbitrary calculations in which the value of electricity varies for no apparent reason. If this were how the laws of physics operated, we would live in a world where objects randomly floated away, disappeared completely, or suddenly became ginormous.”
Kim Kruyshaar 4 Sept 2019
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