1. FFC Briefing to Portfolio Committee on Energy
13 January 2019

2. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Presentation Outline
Introduction
Access to Free Basic Electricity (FBE) and Free Basic Alternative Energy (FBAE)
Financing FBE and FBAE
Implementing FBE and FBAE
Electricity cross subsidies
Is 50kwh sufficient?
FFC Views on block tariffs
Conclusions
FFC Briefing to Portfolio Committee on Energy 22/03/2012

3. 1. Introduction SA has pro poor electricity policies & strategies
Electrifying low income areas and rural regions
Universal electrification as a national goal
FBE improved livelihoods of poor. Energy access is critical for accessing basic necessities of life:
FBE has particular incidence on women and children
With FBE expenditure on energy went down and income freed for other services.
Environmentally unfriendly fuel alternatives abandoned for cleaner electricity

4. 2. Implementation of FBE and FBAE
FFC Briefing to Portfolio Committee on Energy 22/03/2012

5. FFC Briefing to Portfolio Committee on Energy 22/03/2012

6. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Consumer Units (CUs) Receiving Electricity
Consumer Units (CUs) receiving electricity are on the increase
Consumer Units (CUs) receiving FBE are on the increase after some decline between
FFC Briefing to Portfolio Committee on Energy 22/03/2012

7. FBE Coverage Against Indigent Registers
FFC Briefing to Portfolio Committee on Energy 22/03/2012

8. FFC Briefing to Portfolio Committee on Energy 22/03/2012

9. FFC Briefing to Portfolio Committee on Energy 22/03/2012
3. Funding FBE and FBAE
FFC Briefing to Portfolio Committee on Energy 22/03/2012

10. FFC Briefing to Portfolio Committee on Energy 22/03/2012

11. 4. Implementation of FBE and FBAE
FFC Briefing to Portfolio Committee on Energy 22/03/2012

12. Implementation of FBE and efficiency
Generally 4 methods used to implement FBE
Targeted approach (use of indigent registers)
Broad approach (use of stepped/block tariffs)
Technical approach (use of pre-paid metering)
Geographic approach (targeted poor area/region)
FFC research suggests that method used impacts on municipal expenditure and revenue efficiencies
Targeted approach, provided indigent registers are a good reflection of targeted individuals or households
Prepaid metering most efficient
Ensures efficient expenditure of resources (no resource wastage)
Ensures better debt recovery and revenue raising efficiencies
Social implications are the concerns as self elimination is possible
FFC Briefing to Portfolio Committee on Energy 22/03/2012

13. FFC Briefing to Portfolio Committee on Energy 22/03/2012

14. FFC Briefing to Portfolio Committee on Energy 22/03/2012
5. Cross subsidies
FFC Briefing to Portfolio Committee on Energy 22/03/2012

15. Inter and Intra Cross-subsidisation
Many municipalities make surpluses from electricity
Surpluses used to cross subsides other services (Inter service cross subsidisation) (see Graph below)
But within electricity poor consumers are subsidised by well to do ones.
Prices increases are another indicator of cross subsidisation (see next graph below): Price increase for high income people are high & for poor..maximum is 15%.
FFC Briefing to Portfolio Committee on Energy 22/03/2012

16. Electricity Surpluses
FFC Briefing to Portfolio Committee on Energy 22/03/2012

17. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Price Subsidies
FFC Briefing to Portfolio Committee on Energy 22/03/2012

18. Effect of Administered Prices
FFC Briefing to Portfolio Committee on Energy 22/03/2012

19. FFC Briefing to Portfolio Committee on Energy 22/03/2012
6. Is 50kwh sufficient?
FFC Briefing to Portfolio Committee on Energy 22/03/2012

20. But is 50KWH per month adequate?
Free Basic Electricity (FBE) (2003) – 50 kwh hours per month free to most households that have access to electricity -FBE Cover : -Basic lighting
Small black and white TV
Small radio
Basic ironing
Boiling of water using an electric kettle
According to Earthlife Johannesburg (2010) & EG: 4 light bulbs of 60W used for four hours a day for a month consume 20kWh,
an electric stove that is used for one hour a day for a month uses 42kWh boiling a kettle at least 30min a day for a month uses 21kWh.
Based on above...50kwh hours per month insufficient.
Some municipalities provide more than 50KWH per month (see graph below)
FFC Briefing to Portfolio Committee on Energy 22/03/2012

21. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Some Municipalities offer more than the 50KWH recommended.
More metros give more!
FFC Briefing to Portfolio Committee on Energy 22/03/2012

22. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Inefficiencies
FFC Briefing to Portfolio Committee on Energy 22/03/2012

23. FFC Briefing to Portfolio Committee on Energy 22/03/2012
7. View on Block Tariffs
Block Tariffs mean “the more you use, the more you pay and the more your average price of electricity will be”
Decreases unnecessary electricity consumption- induces savings, efficient use and proper conservation
Induces substitution towards other efficient energy alternatives e.g. Solar
But may penalise poor HH with large families!
FFC Briefing to Portfolio Committee on Energy 22/03/2012

24. FFC Briefing to Portfolio Committee on Energy 22/03/2012
8. Conclusion
FFC Briefing to Portfolio Committee on Energy 22/03/2012

25. FFC Briefing to Portfolio Committee on Energy 22/03/2012
Conclusion
FFC notes that FBE is critical for people’ s livelihoods
FBE requires proper targeting
Electricity must be provided efficiently...minimise electricity leakages losses (unaccounted for electricity), elimination of illegal connections and energy savings by households and industry, institute adequate repair and maintenance
Reiterate recommendation on compact cities: Energy savings in a compact city compared to a sprawling urban form, and
22% less carbon emission resulting from more efficient public transport and less travelling
FFC Briefing to Portfolio Committee on Energy 22/03/2012

26. Thank You. Financial and Fiscal Commission
Montrose Place (2nd Floor), Bekker Street,
Waterfall Park, Vorna Valley, Midrand,
Private Bag X69, Halfway House 1685
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FFC Briefing to Portfolio Committee on Energy 22/03/2012