Every year there seems to be a fight on to try and keep the prices down trying to protect the citizens of the country. Hiking prices to cover up their inefficiencies is crooked and unfair.
South Africa is a mess currently with unemployment the highest in the world and the economy shrinking steadily. Stats show over 800 businesses shut down in the first 6 months of this year and that number will only increase with these types of electricity hikes helping boost the rampant inflation.
I was reading a report about a leaked document with proposed electricity hikes for 2025, 2026 and 2027. The problem with leaked documents is they normally are done so on purpose and then become reality. This is how bad news is broken to the masses as it gives them chance to let this news sink in as it is not a current problem, but a future one.
Electricity in South Africa has always been regarded as expensive compared to what the average person earns each month. A telling statistic that I came across is that over the last 15 years electricity costs have risen by 450 % compared to take home pay increasing by an average of 130%. This basically means electricity in real terms is 3 x more expensive than what it was 15 years ago.
The 3 x being more expensive does not take into account the knock on effect the higher electricity prices has on services and goods which has also outstripped salary rises. Everything is linked which effects the total costs of goods which has fueled inflation.
According to the leaked document things are about to get a whole lot worse with next year a 36.15% hike followed by another hike of 11.81% in 2026 and 9.1% in 2027. This is the electricity prices that will be charged to the power utilities direct customers so the majority of users are indirect buying from their local government municipalities thus they will be paying even higher tariffs.
The problem with such steep price increases if this is allowed to happen is that this would cause even more inflation making everyone worse off than they are now. This year the proposed hike was 20.5%, but was only granted to charge 13.6% instead which after the middle man providing the services would equate to an 18% hike. The 36.15% next year may only end up being 25% which is still huge especially as wages don't increase by double digits anymore. If we had this problem this would cost our household an extra $1K every year.
The scary part about this is that as the prices increase more and more households should be moving to solar, but they cannot afford to mainly due to having little or no savings. Very few households would qualify for financing a solar installation as they are already in debt. I keep thinking moving over to solar is just plain common sense, but I am looking at it from a debt free perspective and will have mine in situ within the next 10 days. I have been debt free now besides the house bond for over 5 years now and it is a good feeling. This apparently is very rare and I am one of the lucky few who does not believe in existing on credit cards.
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