Energy regulator approves National Free Basic Electricity rate of 194.40c/kWh for qualifying customers in South Africa

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  • South Africa’s energy regulator,  NERSA, at its meeting held on 30 May 2024, approved a National Free Basic Electricity (NFBE) rate of 194.40c/kWh for the 2024/25 municipal financial year, effective from 1 July 2024.

The NFBE rate is the rate at which municipalities compensate Eskom for providing free basic electricity (FBE) units to qualifying customers. FBE is the amount of electricity deemed sufficient to provide basic electricity services to qualifying households. This amount of energy should be sufficient to provide basic lighting, basic media access, basic water heating using a kettle and basic ironing in terms of grid electricity, as well as basic lighting for domestic electricity users and non-grid systems supplied by the local municipality or utility provider.

The National Treasury provides the FBE funding to local authorities through equitable share allocation, as identified by the Department of Cooperative Governance and Traditional Affairs (CoGTA). The Local Government Equitable Share Funds are funds granted by the National Government and are equitably distributed to local authorities to supplement their internally generated revenues and provide basic services to poor households.

According to section 15(2) of the Electricity Regulation Act, 2006 (Act No. 4 of 2006) (‘the ERA’), a licensee may not charge a customer any tariff other than that determined or approved by the Energy Regulator as part of its licensing conditions. The NFBE rate is adjusted annually using a methodology that was approved by the Energy Regulator in March 2021. The National Energy Regulator of South Africa (NERSA) is engaging with all the relevant government departments with regard to reviewing the 50kWh units per month, considering the changes in the economic conditions since this was first implemented in 2003. 

Author: Bryan Groenendaal


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