DOCUMENTS

How expensive is our electricity really?

A rough comparison of prices for domestic consumers in the US and SA

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:

US state or SA metro

Price in SA cents per kilowatt hour - 2009

Category of consumer

Nelson Mandela Bay

61.34

Scale 31 Urban & Scale 36 Peri-Urban

Idaho

61.58

 

Tshwane

62.57

Domestic standard supply

Ethekwini Municipality

64.30

Medium sized residential premises.

Washington

65.09

 

West Virginia

67.35

 

North Dakota

68.68

 

Kentucky

71.19

 

Nebraska

72.02

 

Utah

72.11

 

Louisiana

73.19

 

South Dakota

73.61

 

Wyoming

73.95

 

Oregon

74.03

 

Oklahoma

74.61

 

Montana

74.70

 

Cape Town

77.37

Domestic Low (400-800 kWh per mth)

Missouri

77.71

 

Ekurhuleni

77.80

Yearly ave for low power consumers

Johannesburg

78.52

Prepaid 2 (501 to 1000 kWh)

Tennessee

79.88

 

New Mexico

80.21

 

Arkansas

80.38

 

Colorado

81.22

 

Kansas

83.64

 

Georgia

84.14

 

Indiana

84.39

 

Minnesota

85.31

 

North Carolina

86.56

 

Alabama

86.98

 

South Carolina

87.57

 

Iowa

87.73

 

Mississippi

87.82

 

Virginia

93.50

 

Ohio

94.17

 

Arizona

94.67

 

U.S. Total

99.10

 

Michigan

100.52

 

Pennsylvania

100.85

 

Wisconsin

101.10

 

Illinois

101.69

 

Florida

101.94

 

Nevada

104.11

 

District of Columbia

106.28

 

Texas

108.29

 

Delaware

123.16

 

Rhode Island

124.58

 

Maryland

125.33

 

Maine

126.92

 

Vermont

127.09

 

California

127.25

 

New Jersey

134.94

 

New Hampshire

138.62

 

Alaska

146.30

 

Massachusetts

147.64

 

New York

149.06

 

Connecticut

174.21

 

Hawaii

184.16

 

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

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