LUNGILE MASHELE: ‘User-pays’ principle leaves everyone vulnerable to energy poverty

After apartheid, SA adopted the user-pays principle for services such as electricity and water. The principle is that costs should be directly related to the amount used by a consumer; those who use more electricity or water pay more. The principle aims to promote responsible electricity consumption and encourage energy efficiency. 

The outcome has been less than favourable. It has caused energy poverty not just of the poor but of every South African. Energy poverty is defined as households spending more than 10% of their income on energy. This includes not just electricity but biomass, paraffin, lignite, gas, petrol and other forms of energy.

The user-pays principle deployed in SA has left each member of society vulnerable to energy poverty. India and China grapple with setting electricity tariffs that balance affordability for a large underprivileged population with the need to sustain and invest in the power sector. Both countries consider the cost of services, subsidies and cross-subsidisation when setting tariffs.

India uses a flat tariff structure for most consumers, but from 2025 time-of-use tariffs will be introduced. China, like SA, employs a tiered structure with increasing rates for higher consumption, though electricity in China is heavily subsidised. 

Key challenges to the user-pays principle are affordability for people living below the poverty line; the widening gap between social classes, which could lead to social unrest; poor service delivery; and limited access to affordable alternatives such as solar panels or biogas.

The user-pays principle prejudices a township dweller who lets out back rooms for income, for instance, or someone who makes vetkoek or sews from their yard. The principle can thus create a situation in which people cannot afford the minimum amount of electricity needed for basic needs. 

Shack fires

Contrary to popular belief, energy poverty does not just relate to the poor. Yes, you in your R6m house who think twice before switching on the underfloor heating or panel heaters are in a state of energy poverty. You in your loft apartment in Sandton who does not use your electric blanket or all three bars of the gas heater also suffers from energy poverty. It also applies to you who earn R20,000 a month but counter the cold by going to bed early and wrapping yourselves in blankets because you don’t want to set the air-conditioning to 26°C. 

According to Good Governance Africa, 600,000 households live in extreme energy poverty in SA. These households depend heavily on paraffin, even though the fuel is responsible for about 5,000 shack fires and 2,000 deaths annually.

On July 5, four members of the SA National Defence Force, deployed as part of Operation Vala Umgodi to apprehend illegal miners, started a fire in their container to ward off the bitter cold. They were found dead during a morning changeover; carbon monoxide poisoning is suspected. 

In August 2023, fire and rescue services in Cape Town recorded 14 fatalities in one weekend, including seven minors. All the fatalities were a result of carbon monoxide poisoning after people took drums of hot coals indoors to keep warm. 

This is 2024 — why are people still dying from carbon monoxide poisoning and fires related to paraffin use? This is an indictment on everyone in the energy industry and government. People are making the wrong choices not because they are uneducated but because they are desperate to keep warm without paying an arm and a leg. People are literally making the decision between spending R500 more a month on electricity and death. 

My focus is on energy poverty because it is the only one I can articulate well. However, there is food, education, housing, healthcare and transport poverty — there is poverty all around. Sadly, the philosophical debates and technology posturing that have raged for years have not solved for the basic need to keep warm.

• Mashele, an energy economist, is a member of the board of the National Transmission Company of SA.