Much Ado About Prepaid – The pros and cons of making the switch

There’s been a lot of discussion around how best to reduce electricity consumption and save on energy bills. You’ll find tips and tricks (legal ones) all over the internet. But rising energy bills remain a concern for many people. Many have chosen to take more active control of their energy consumption by switching to prepaid electricity. Sunburst Electric would like to illuminate the subject and give you a few pros and cons so that you have enough information to make a decision regarding what would work best for you.

No fixed monthly fees

The first and most obvious place where cost savings occur is in the fact that you don’t pay fixed monthly contract fees. Does that cost add up to anything significant, though? Well, it depends on how you define the word ‘significant’. Eskom “has many different tariffs for various consumers depending on their electricity consumption and other needs. Most residential customers with billed meters (not prepayment) pay a large initial installation cost to get electricity. (This initial cost covers part of the cost for the electricity network like the cables, poles, transformers, etc.) These customers then also pay a fixed monthly amount in addition to the actual energy portion that is consumed. Because of these additional amounts, the charge per unit of electricity is lower. For prepayment electricity you only pay for the energy consumed but at a somewhat higher rate.” Simply put, you don’t get the same benefits as those under contract with Eskom.

Full control over electricity consumed

For all of us control … ahem, fanatics out there, there’s some degree of comfort in knowing precisely how much electricity we consume. Knowing the exact figure, however, can also be a little frightening. But there is something to be said for being more aware of consumption and taking active steps to reduce that amount every month (as an added bonus, more candlelit dinners are never a bad thing, right?). 

Eskom also mentions a few advantages related to awareness and costs: 

  • “Since the prepayment meter provides a continuous display of how much electricity you have left and also a flashing light showing how fast you are using electricity, many customers find it much easier to budget their electricity usage and to actually save electricity.”
  • “Many customers do not understand the accounts for the billed system or how the amounts are calculated. With the prepayment system you can be sure you will get a Rand’s worth of electricity for every Rand you pay.”

While control over consumption and freedom from restrictive and binding contracts are a good thing for some people, there – however – are significant pitfalls to the systems surrounding prepaid electricity. In a recent article on Businesstech, Ted Blom (independent energy expert) condemned prepaid power suppliers for their lack of transparency. “The system is deliberately opaque, he said, as suppliers monopolise specific areas and developments.” According to Blom, “You can’t shop around – the supplier owns the lines that go to your house, and that’s not open to others. This will only change with a review of the industry. Whoever you have [as] a supplier is who you are stuck with.” 

Furthermore, Eskom makes use of something called the Incline Block Tariff system whereby “units are split into different blocks. The more you use, the more you pay per block. So if you pay as you go through the month, or pay for more power than you need, you will end up paying more, but not getting more units on average”. Blom advises users who want to get the most out of prepaid electricity to buy their units at the beginning of the month so as to avoid getting pushed into the next block: “Buy what you need in a month, at the start of the month, that will get you the best deal.” 

Both systems have their advantages and disadvantages. At the end of the day, electricity is an expense you’re simply going to have to shell out for every month. If you don’t want the extra hassle of monitoring your consumption, then stick with postpaid electricity usage. If, however, you want to know precisely how much money you’re spending on your electricity, then prepaid is definitely a better choice for you. Our advice is to switch off lights and other non-essentials when they’re not in use, and to only switch your geyser for the amount of time it would take to heat up the water you need. Then pour in the bubble bath, run your bath, and light some candles (see, they’re not just for dinner time!). With just a few small changes to your daily habits, you can relax and rest easy knowing you’ve gotten just a little closer to treating yourself with the money you’ve saved at the end of the month (and buying more candles … maybe even splurging on the scented ones!).

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