JOHANNESBURG - Government and Eskom have made much of the fact that South Africa's electricity prices are amongst the lowest in the world. The suggestion is that domestic consumers of electricity (and others) should not whinge too much at another few rounds of swingeing price hikes at the 31.3% level. But how cheap is electricity for South Africa's domestic consumers really?

As the economist Mike Schussler has noted previously the pricing for industry may still be low, but the recent tariff increases have hit residential end users hard. Many municipalities make huge profits from selling on Eskom electricity to residential consumers.

How then do the prices domestic users pay in South Africa compare with, say, users in the United States? Below is a table comparing - somewhat unscientifically - the current costs of electricity for domestic consumers in the largest metropolitan areas in South Africa, with the average ultimate retail price of electricity to residential customers in the different states in the USA in May 2009 (see source).

The conversion from USD to ZAR pricing was made using the average exchange rate in May ($1= R8.36). Many of the metros have a bewildering variety of tariffs depending on the means and extent of consumption. But for this rough guide we have used medium to low domestic consumption - where the tariffs are available solely in cents per kilowatt hour (i.e. not including an additional daily rate.)

As can be seen from the table at the moment such domestic consumers in South Africa's metropolitan areas pay similar tariffs to residential consumers in the cheapest American states. However, if electricity tariffs increase in South Africa at 31,3% over the next few years the price will more than double. Domestic consumers will then be paying as much, if not more than, residential consumers in even the most expensive US states.

Cost of electricity for residential users in South Africa metros and US states - price from least to most expensive:

Sources: Energy Information Administration, US; Tshwane municipality, Ekurhuleni municipality, Johannesburg municipality, Nelson Mandela Bay municipality, Cape Town municipality, eThekwini municipality.

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