Govt outlines revised electricity pricing policy aimed at lowering costs

The policy seeks to align electricity prices with recent reforms in the energy sector and move towards cost-reflective tariffs, while protecting low-income households and supporting industries facing financial pressure.

The revised policy will be gazetted for public comment on Friday, 21 August.

Among the key proposals is the introduction of cost-reflective tariffs, which would align electricity prices more closely with the actual costs of generation, transmission, distribution and retail.

The policy also proposes a 10-year electricity pricing forecast.

Ramokgopa briefed the media in Pretoria on Tuesday.

“It is for this reason that, as part of this Electricity Pricing Policy, NERSA will be required to publish a 10-year price forecast. This is important because, for heavy industries, when people want to make significant investments in the South African economy, and they're investing in a sector that relies on electricity, they want to compute their return on investment,” he said.

"If electricity is a big part of the input cost, you need to have an appreciation of what the price path looks like,” said Ramokgopa.

The government says this will provide households and businesses with greater long-term visibility, allowing them to plan ahead and prepare for potential increases in electricity costs.

At the same time, the policy aims to protect poorer households by expanding the baseline for free basic electricity, without placing an additional burden on the national tax base.

The revised policy is now set to go through a public consultation process, giving South Africans and other stakeholders an opportunity to comment on the proposed changes.