Wednesday, 23 April 2008

Eskom price increases are looming…. Does it pay to fill up your pre-payment meter or not?

This article tries to answer all these questions and more…. (and ElectricityTariffCalculator.xls tool)

When are the tariffs going up? How much will the increases be? How full can your pre-payment meter go? How much can I purchase on my credit card? Which tariff plan am I on? If I fill my meter up too much will I lose my free 50 kWh per month?

First of all I’d like to acknowledge the sources of my information:

To answer my list of questions I Googled a lot but couldn’t really find any answers so I decided to write an email to Eskom and to I was pleasantly surprised to receive an email from Eskom early the next day requesting more information (the region that I was in), but even more impressed when I received a telephone call from Donovan from the support team who meticulously explained how the tariffs work and gave me the answers below.

Other sources:

Note: all specifics (tariffs and dates) relate to the City of Cape Town. Eskom customers and other regions will have different rates and dates, but the principles are probably similar.

1) When are the electricity tariffs going up?
City of Cape Town’s financial year runs from 01July – so increased tariffs will probably
be on 01July, so you’ll need to purchase your extra units before then. Why not put a reminder in your calendar now….”Thurs26June: purchase n‑months worth of electricity”. (Eskom's financial year runs from 01April)

2) How much are the electricity tariffs going up?

I have read that they will be going up by 14.2% but I have not seen an increase yet. Eskom has requested approval for a 53% increase, but this has not yet bee approved. At this stage (as on 22April2008) neither the 14.2% nor the 53% increase has been finalised.

3) How much pre‑paid electricity can I purchase before the increase?

To save money you can top up your pre-payment electricity to a maximum of 9,999 units. allows purchases of up to R2,500 per transaction but more than one transaction can be made…. as long as your credit card can take it! If you try and top up too much, then your meter will disallow entry of the ‘token’ – you will need to wait until you’ve used up some units.

Note: that if you pay a ‘daily service fee’ [on tariffs: ‘Domestic 1’ or ‘Domestic 3’], then you cannot pre-purchase ‘daily service fee’ “credits” (in other words, you can only stock up on units, not ‘daily service fee’). This means that if you purchase 4 months worth of units, you will pay the current per unit price of electricity, and in 4 months time when you purchase again, you will then be charged 4 months of ‘daily service fees’ (at the new increased rate)…. So, there’s no getting around the ‘daily service fee’ increase.

4) When must I key in my purchased units?

The purchase transaction is for units (not Rands) – the pre-payment meter has no knowledge of the actual price of the electricity, so it doesn’t matter when you enter the token into the meter – as long as the purchase is made before the price increase comes into effect (that’s probably 01July for City of Cape Town).

5) If I purchase a lot of units now, will I lose my free units per month (or be moved to a high-usage tariff)?

If you are on tariff ‘Domestic 2‘ (i.e. low consumption: less than 600 kWh per month) and if your average consumption over past the 12 months is less than 400 kWh per month, then you qualify for 50 kWh free per month (that’s 50 free units per month).

You are charged by ‘how much you consume’, not by ‘how much you purchase’…. So, purchasing lots of units before the price increase will not affect your free units per month (as long as you stay using less than 400kWh per month!)

Note: it’s human nature to use more when there is more…. ie: if the meter’s full, the human will use more electricity – so beware!

6) How can I calculate the savings?

Since the exact increases are not yet approved, it’s difficult to calculate the savings, but I have assumed two increases: 14.2% and 53% and allocated these increases to the ‘per unit’ cost and the ‘daily service fee’ – see the ElectricityTariffCalculator.xls for figures.

So, what's the bottom line? Does it pay to fill up your pre-payment meter or not?

Yes, if electricity goes up by (say) 15% then you will save 15% - so, figure out whether it's worth "investing" your spare cash into buying "cheap" electricity before the increases.

{It's the same reasoning process as when the price of petrol/diesel goes up - although your petrol/diesel tank has a lower capacity (50 litres, or whatever) - in the case of electricity purchase, the limit is your credit card limit :) }

Any more questions? Any errors spotted? Do you have any more information?

Write a comment and HandyTechTipper will attempt to answer asap.


  1. Well done Handy Tech Tipper. A well written article. As I said before keep those excellent and handy calculators coming.


  2. Off course how much you save depends on if you pay interest on the amount spent on your credit card. In other words if you have to borrow to spend you might not save ...

  3. @John K Weber: my most faithful visitor! Thanks for your comments, it's comments like this that keeps me going, ;)

    Hi JQB, thanks for your comment... I agree, a credit card is a double edged sword. You need to be very, very disciplined and pay the full amount each month and reap the benefits of having your cash in your homeloan account rather than in your wallet, as well as earning those spending rewards/miles/cashback.

  4. Re "You are charged by ‘how much you consume’, not by ‘how much you purchase’":

    With normal prepaid meters, there's no way for Eskom or the city to know how much you've consumed, so of course you're charged by how much you purchase.

  5. Hi Bernd

    If you buy 100 units, then after 100 days you then buy some more units then you have used (on average) 1 unit per day.

    So they can know how much you consume.

    Make sense?

    Tks for your comment ;)


  6. HTT,

    No, they still only know how much you've purchased: you've only *bought* on average 1 unit per day - from there it's quite a leap to conclude that you've also used that many. If instead you're stockpiling, and buying twice as many units as you really need each month, you're paying for that double amount - not for the amount of actual use. I must be missing something.

  7. Hi Bernd

    I don't think you're missing anything - they are concluding that you will only buy more units once you've used up what you've previously purchased... so, you are correct when you say: that's "quite a leap to conclude that you've also used that many"... but it seems that's what they are doing. Refer to the transcript of an interview on CapeTalk567 with Eskom's Neil Ballantyne:

    Having said that - it's actually what I do - I stockpile at the old price, then only buy more units when I've run out... so it does work out correctly - what I've stockpiled is what I've used due to the fact that I only buy more when I've run out.

    Thanks again for your comments ;)



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