Changes to ‘Free’ Electricity in South Africa Starting Next Month

The National Energy Regulator of South Africa (Nersa) has approved the new National Free Basic Electricity (NFBE) rate for 2024, which will take effect next month.

What is the NFBE Rate?

• Definition: The NFBE rate is the rate at which municipalities compensate Eskom for providing free basic electricity (FBE) units to qualifying customers.
• New Rate: For the 2024/25 municipal financial year, the rate is set at 194.40c/kWh, effective from 1 July.

Purpose of Free Basic Electricity

According to Nersa, free basic electricity is intended to provide essential electricity services to qualifying households.

• Basic Services: “This amount of energy should be sufficient to provide basic lighting, basic media access, basic water heating using a kettle, and basic ironing,” Nersa stated. It also covers basic lighting for domestic users and non-grid systems supplied by local municipalities or utility providers.

Funding and Distribution

• Funding Source: The National Treasury funds the FBE through equitable share allocations identified by the Department of Cooperative Governance and Traditional Affairs (CoGTA).
• Distribution: Local Government Equitable Share Funds supplement municipal revenues to provide basic services to poor households.

Regulatory Compliance

• Electricity Regulation Act: Section 15(2) of the act mandates that licensees charge customers only the tariffs approved by the Energy Regulator.

Annual Adjustments

• Methodology: The NFBE rate is adjusted annually based on a methodology approved by the Energy Regulator in March 2021.
• Review of Allocation: Nersa is currently reviewing the 50kWh monthly allocation in light of economic changes since its implementation in 2003.

For more information, stay tuned as these changes take effect and impact electricity costs and availability for qualifying South African households.

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