Electricity price hike 2022
Article by: Kimberly Guest
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New electricity products proposed

The Department of Mineral Resources and Energy's review of its Electricity Pricing Policy (EPP) reveals a desire by government for the development and introduction of "special" electricity products and prices. The review has been published in the Government Gazette for public comment.

The special products will be in addition to the standard range of pricing and products and, together with enabling technology, are aimed at increasing sales and penetration of demand response programmes.

The first suggestion addresses "curtailable and interruptible rates" and would see consumers being paid or rebated to reduce consumption during periods of high demand or when capacity is constrained.

The second product targets time of use (TOU) tariffs. In this scenario, the department proposes that "very high prices" will come into effect when the electricity grid is under pressure and the reliability of the system is threatened, while lower tariffs come into play during other periods.

The department is also keen for the market to pursue real-time pricing products. This suggestion is similar to pre-paid cellular bundle offerings where rates will be offered on an hourly or daily basis. Additionally, government would like to see "short-term flexible products and services" offered to address both supply and demand.

Finally, the EPP review recommends that green energy tariffs be introduced to consumers to support the adoption of green technologies in the energy market.

Challenges ahead

Similar to the introduction of prepaid bundles offered in the cellular market, the proposed special products will enable consumers to manage their electricity spend through planning their consumption for off-peak periods.

However, the review does not delve into how these products would be delivered to households. With many pre-paid consumers still unable to receive their free basic electricity allocation, it could be some time before the technology is developed for such products to be offered through vendors and enable electricity meters to recognise and manage multiple electricity products.

That is not the only stumbling block as introducing numerous flexible and short-term products will place strain on the energy regulator. In this regard, the department has noted that Nersa will need to develop a framework that will facilitate rapid approvals for such tariffs.  

For more information:

Electricity Pricing Policy Review, 2022

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