Electricity tarrif structure and revenue collection in South Africa : a case study of the greater Mafikeng area

Abstract

Until 2004, successive governments in the post apartheid South Africa were reluctant to approve economic rates or tariff increases to enable Eskom to achieve the statutory financial performance standard. However, in October 2004, the Mbeki government took the first bold step and allowed Eskom to lead this current phase of building new electricity generation capacity, which it was previously prevented from undertaking. It is against the background of aggravated need for investment capital that efficient and effective revenue collection is investigated in this study in search of an optimal solution. Eskom has to formulate strategies that would ensure that consumers pay prices that would enable them have uninterrupted power supply. Studies in this area are important in solving energy poverty currently prevalent the country. In order to effectively solve energy poverty problem, the research concludes that Eskom must improve on its revenue base by enhancing the efficiency of its sales collection. This conclusion was arrived at by analysing the opportunities, challenges and problems associated with revenue collection by Eskom.