Let’s take a closer look at the more common types of tariff structures that are applied by the various Municipalities.
Each municipality will have its own series of tariffs that they apply to their customers. If we had to take them all and throw them into a basket we would be able to basically classify them into four main types
The first type is what we call a fixed tariff. A fixed tariff is one set amount that gets charged per unit irrespective of how much you use during the course of the month, for example R1.30 per kWh.
The second tariff type is what we call an Inclining Block Tariff, IBT for short. This particular tariff type is based on a tiered structure and the purpose behind this, is to encourage users to be more responsible with their consumption, in other words you will have a different rate applied to each tier during the month.
An IBT will look like this:
The more you use the more you will pay per unit so in our example tier one for an electricity meter, the user will pay R1.10 per unit for the first 500 kWh’s but as soon as consumption exceeds 500 kwh they move up to tier 2, the rate then increases to R1.26 per unit and so on. When this tariff is applied, the system keeps track of the purchases taking place during the month and knows which tier rate to apply when a token is purchased. The system will then reset each calendar month.
The more complicated tariff you get is what we call Time of Use (ToU). What time of use means is that the municipality will charge a different rate depending on the time of day. It’s also important to mention here that in order to bill ToU you need to have a very specific meter connected to a network in order to be able to record the varying consumption over that 24 hour period.
The rates applied would then be split into three categories: peak, standard and off peak. Peak would be the most expensive cost per unit and that’s normally in the mornings and the evenings when demand is highest, during the day would then be billed at a standard rate and your off peak would then be billed for consumption that takes place overnight.
If your municipality is using this tariff type our utilities department who is responsible for setting the tariffs on the meter accounts will give you some recommendations on how best we can customise your tariff to accommodate this tariff type.
The last main tariff type is what we call a Seasonal Tariff. What happens here is that the Municipality will have a different rate for when the season is in low demand versus when the season is high demand. High demand or what we would call the winter rate is normally billed in June, July and August. The low demand rate is then applied from September to the following May.
What happens quite often is that the Municipality can have a combination of these tariff types that we’ve just mentioned. For example, you could have a Seasonal Inclining Block Tariff. That would mean that your tariffs will need to be adjusted during the course of the year to accommodate these changes.
Now that you understand the different tariff structures have a look at your municipal account and compare them to the tariffs loaded onto your prepaid meter accounts. It is also quite important to evaluate the impact of the other charges on your municipal account and whether you are recovering them as well.