The outcome of a document in which the National Energy Regulator of South Africa (NERSA) proposes a new methodology for calculating power tariffs may be that consumers with self-generation capacity will pay much more for their power.
Although the reasoning behind NERSA's proposal is sound, it may be better to use smart metres to reflect generating costs in tariffs.
NERSA proposes in the document that costs and tariffs must be clearly separated and thoroughly analysed. Likewise, the costs associated with every power generating unit (even the various coal-fired power stations) must be calculated. It will ensure that any losses with generation are not overlooked.
The biggest problem, though, is the variable pattern of households' power consumption. It means that there are great peaks in power consumption at certain times, like in the mornings just before work and in the early evenings.
Stable consumption, which is maintained throughout the day, mostly by consumers in the trade and industry sector is called baseload usage. It is fairly predictable and is supplied mainly by coal-fired and nuclear power stations at a reasonable cost.
The peaks, however, create some problems. The solution is either that power supply is stabilised throughout the day based on the peaks, which results in a great power loss, or that special generators are used in peak load times.
In South Africa, open-cycle gas turbines are currently being used during peaks, but they generate each power unit at a much greater cost than the baseload generators.
The argument is that consumers who generate their own power with solar panels decrease the baseload.
But during peaks, they generate very little to no power and, thus, the peak load remains the same. In this way, they are forcing other consumers to pay for more expensive power generation.
NERSA, therefore, proposes that these producer-consumers pay a tariff that is five to ten times higher than industries.
NERSA's reasoning fails to take into account that many of these producer-consumers may include shopping centres, schools and other institutions that do not contribute to the peak load. It also fails to consider that such producer-consumers located in the west of the country may contribute to the power supply in the early evenings, while those in the east could contribute in the mornings.
Furthermore, it assumes that every individual consumer conforms to the expected consumer profile and then they are assessed accordingly.
A better solution is to require all producer-consumers to install smart metres that indicate how much power is used at different times. It could encourage consumers to install battery storage, which will reduce their peak power consumption without them having to go completely off-grid.
An unfortunate outcome of NERSA's proposal could be that those consumers who are able to afford it will defect from the grid completely, which will leave the system without their payments as well as their potential contributions to power supply. Both of these must be avoided.
;
