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An expert breaks down electricity costs and how to save money

25 Jun 2019

Property News

Brought to you by Property24

With new electricity rates set to kick in on 1 July, and with the prospect of more load shedding always on the horizon, now is a perfect time for consumers to improve their knowledge of how electricity costs work, and how they can save energy and money.

Franze says understanding how electricity tariffs work is the first step towards taking charge of your spending.

“The price of municipal electricity is about to increase by around 13% to 16%, and consumers are going to be hit hard. Understanding how electricity tariffs work is the first step towards taking charge of your spending,” says Citiq Prepaid managing director, Michael Franze.

“Unfortunately, the exact details of how any particular electricity bill is calculated can be so complex it’s difficult for even experts to understand. At Citiq Prepaid we do some very complex calculations to make sure we’re charging every user the right tariff, no matter where they are or when or how much electricity they are charged. Our goal is to make things fair and transparent for everyone. We help landlords collect what they owe to the municipality or Eskom, not to make a profit on the selling of electricity.”

In the long term, Franze says the real solution is for Eskom, municipalities and the National Energy Regulator to design simpler consumer tariffs. But in the meantime, there are three basic pieces of information that can help consumers to make sense of their electricity bills.

“Firstly, your charges will vary depending on where you live. If you get your power directly from Eskom, which is the case in many rural areas and in Soweto, for example, you will be charged according to a different system than if you get your electricity from a municipality. And each municipality has its own system as well,” he says.

For example, in Cape Town people with homes valued at over R1 million pay a basic home user charge that covers the cost of keeping them connected, no matter how much power they use, some municipalities like Ekurhuleni have different tariff systems depending on how much a household uses in a month, and different municipalities charge different rates for a unit of electricity. So it’s important to check what your own municipal system is.

If you leave a 100W traditional light bulb on for a whole week, which is 168 hours, Franze says you’ll use nearly 17 units of electricity. If a unit costs R1.50, then it works out to about R25.50 to keep that one light bulb burning for a week.

Secondly, Franze says it’s helpful to understand the incline block tariff (IBT) system. “Basically, this means that the more electricity you buy in a month, the more you pay. In the case of prepaid customers, it has nothing to do with how much you actually use - the cost is purely based on how much you buy. This means that electricity is one of the rare cases where it’s really not a good idea to buy in bulk. Rather buy from week to week, or buy just enough at the beginning of each month to keep you going. It’s cheaper to top up with a few units at the end of each month than to buy enough to last you for two months.”

Thirdly, consumers should understand exactly what they’re getting when they buy a unit of electricity. “The terms can get confusing, but when you break it down it’s actually quite simple,” says Franze.

“The amount of power any appliance uses, also called its power rating, is measured in Watts (W), and this is always marked on the packaging or somewhere on the appliance. So an energy-saving lightbulb might use 20W and an iron would be around 1 000W or 1 kiloWatt (kW), for example. A unit of energy, which is measured in kiloWatt hours (kWh), is just the amount you need to run a 1kW appliance like an iron for one hour. So your unit will last a long time if you’re using appliances with a low power rating, or get used up really fast if you’re using more power-hungry appliances. A good general rule is that the more heat an appliance generates, the more power it uses.”

Franze says this means there are two ways to save electricity:

1. Choose the right appliances

Franze says the first thing to do is choose appliances with a lower power rating. For example, if you leave a 100W traditional light bulb on for a whole week, which is 168 hours, you’ll use nearly 17 units of electricity. If a unit costs R1.50, then it works out to about R25.50 to keep that one light bulb burning for a week. If you change to a 4W LED energy-saving bulb, you’ll use just over 0.6 units in the same week, and spend about R1 - a saving of R24.”

2. Use your appliances less, and smarter

The second way to save is to use each appliance for fewer hours.

“Fridges, freezers and alarm systems are the only things in most houses that need to be on all the time. With everything else, the less you use the more you’ll save. Switching things like TVs and DVD players off at the wall when you’re not using them is one of the easiest ways to save,” says Franze.

“Once you’ve switched off appliances that stay in standby mode, look at the things which use most power: stoves, ovens, geysers, kettles, irons and heaters. For example, even the most efficient wall panel heater uses 400W an hour, which is nearly R2.50 a day if you use it for four hours. A two-bar infrared heater will cost twice as much. Closing the curtains to keep the heat in, and putting on a jersey instead of turning on the heater could potentially save hundreds of rands a year.”

In the same way, Franze says consumers should find ways to use ovens and stoves more efficiently. “A wonder box for cooking grains, rice, potatoes, beans and other dishes that need slow cooking saves on electricity. There are many other ways to save electricity, and we should all start becoming more familiar with them. For our wallets and for the planet, we need to start using energy more efficiently.”

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