Severe pressure from Eskom on consumers

According to Eskom, the typical suburban household is currently paying R990 per month for electricity. If we look at a suburban resident, with a take-home income of R20 000 per month, he is currently spending 5% of his disposable income on electricity.

A 35% annual price hike for each of the next three years, would see those average payments for electricity rising to R2436/month in the suburbs. If we assume that the resident in this example receives annual increases of 6% per annum over the next three years (using the upper band of our inflation targets), this person would earn R23 800/month by the 2012/2013 year. By then, the proportion of his income spent on electricity would rise to 10.2%. This implies an effective doubling of electricity costs in real terms and has serious implications for consumers.

For consumers who have a net monthly income of R15 000, the situation is worse. In the suburbs, such a consumer would currently be paying an average of 6.6% of his salary on electricity. Assuming a 6% annual salary increase, this consumer's electricity costs would rise to almost 14% of his monthly net income.