Electricity wheeling should be used to improve security of supply rather than another way for Eskom and municipalities to load electricity costs.

Planning policy and pricing for wheeling electricity is an opportunity for innovation to improve the system.

“We need innovation as the grid and the way the energy system works is changing. Wheeling is one of the opportunities for innovation,” says Liz McDaid, OUTA’s Parliamentary and Energy Advisor.  

McDaid gave a presentation to the Electricity Wheeling Conference in Cape Town on 30 March, calling for innovation to improve the industry. This includes ensuring that a wider sector of players is brought into policy discussions.

Wheeling refers to moving electricity through the grid from a generator to consumers. Those generators are usually Eskom and independent power producers (IPPs), but should soon also include municipalities, businesses with spare capacity from their own systems, and even individual households which use solar or wind power and sometimes have a little extra.

Eskom and the municipalities, which own the transmission and distribution networks, intend to charge those other generators for wheeling their electricity into the grid.

OUTA believes that transparency and a focus on an innovative electricity supply system are crucial in setting wheeling policy and pricing.

Those who are in a position to contribute to the grid through generation should not be penalised for this or seen as a source of more cash by municipalities which hope to profiteer from wheeling.

It is also important to take into account the poverty across South Africa, where 19 million people receive social grants, and the consequent need for an affordable basic supply. At the same time, customers who can afford it are migrating off the grid.

“The system in which we could charge what we like and expect people to pay is gone,” says McDaid.

“Extending grids as an investment with the assumption that all households will get rich enough to pay for their electricity and provide a return on that investment is not working. If the tariff structure is such that people either can’t afford electricity or go off grid because it is cheaper, then the system won’t work.”

Consumers who are struggling financially – households and businesses – may find that their fixed monthly connection costs are higher than their power charges. This is becoming a greater problem as municipalities increase fixed charges and surcharges, often using these to subsidise other services.

McDaid says there are opportunities in wheeling if all players are involved in the discussions and the costs are transparent.

The public needs to know what generators and customers are being charged for and why. The real costs of grid maintenance should be established, not guessed, to clarify the charges.

Grid charges should relate to when a consumer wants power and for how long.

“Wheeling should help to drive a sustainable, affordable electricity system which benefits all citizens, rather than contributing to a system resulting in increased inequity,” says McDaid.

Additional generators would help ease Eskom’s generation shortages and improve security of supply.

In the UK, energy companies are incentivized to ensure security of supply by having to provide customers with food vouchers if there are power cuts during evening meal times, or refunding customers when they can’t supply.

In Brazil, consumers can pay for the portion of time that they use the grid, rather than fixed monthly costs.