Parliament heard that approximately R30 billion is lost annually through electricity theft and illegal connections.
Only 22.8% of poor households are given free electricity, representing one in four qualifying families.
This was revealed during a Parliamentary portfolio committee on electricity and energy on Wednesday, where the Department of Electricity and Energy gave a briefing on its load reduction strategy.
The department presented a comprehensive strategy to eliminate load reduction across South Africa by March 2027, targeting 1.69 million affected customers through a three-phase implementation plan focused on smart meter rollouts, expanded free basic electricity, and distributed energy resources.
Dr Kubeshnie Bhugwandin, Renewables Manager at Eskom, told the parliamentary portfolio committee that load reduction represents a critical challenge distinct from the national load shedding crisis.
She described it as “a proactive approach used by Eskom and utilities globally to manage electricity consumption, particularly during periods of high demand like your morning and evening peaks.”
Free basic electricity challenges
Parliament heard that only 485 000 indigent households receive free electricity despite there being 2.1 million eligible homes.
Collin Reddy, Eskom’s General Manager, acknowledged the shortfall.
“The process in registering these indigent communities are within the municipality. So we rely on the municipalities in registering these. Then, based on that registration, we get a request in terms of the number of indigent registered members, and we then provide those particular members,” he said.
Bhugwandin added context on the regulatory framework, noting that the Municipal Systems Act and Free Basic Services Policy empower municipalities to develop their own indigent determination criteria.
“Each municipality will tailor its indigent criteria to local socioeconomic conditions, but they do so within the national policies that are issued by Cogta and the national treasury,” she said.
Concerns were raised about the lack of standardisation in determining indigent status. ACDP MP Wayne Thring, questioned whether inconsistent criteria across municipalities could lead to exploitation or misinterpretation.
He highlighted that one municipality might set the threshold at R10 000 monthly income while another might use R3 000 or the poverty line index.
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Policy and framework development
The department said the electricity pricing policy is currently moving through cabinet processes after undergoing public comment and National Energy Regulator of South Africa consultation procedures.
Bhugwandin explained that policies and regulations are iterative processes, with the electricity pricing policy expected to generate frameworks for free basic electricity, subsidies, and regulations.
Bhugwandin indicated that studies are being undertaken by the South African Local Government Association, universities, the South African National Energy Development Institute, and in discussions with the National Treasury.
“We will consolidate those studies and then make a recommendation and put out a framework. Our target is in quarter four. By the close of the financial year, we would have settled on whether the free basic electricity moves between a range of 50 to 200 kilowatt hours,” she said.
She emphasised the fiscal constraints involved.
“It is a zero-sum game, which means that the money has to be found somewhere within the system. So that is what the studies are about as well, to try and understand how we do it, where we do it, and then put out that framework,” Bhugwandin explained.
Eskom smart meter rollout plan to tackle load reduction
Concerns have emerged about whether the utility can meet its interim targets amid ongoing procurement processes and infrastructure challenges.
The utility is targeting the installation of 577 000 smart meters by March 2026, with current stock levels sitting at approximately 278 000 units.
According to Reddy, the company has already installed roughly 131,000 to 137,000 smart meters as of late October 2024, with plans to install 100,000 meters in both October and November, followed by 45,000 in December during the low season period.
However, the gap between available stock and installation targets has raised questions about feasibility.
When pressed by MPs on whether Eskom would meet the March 2026 target, Ready confirmed that additional procurement processes are underway.
“In terms of the stock, that is the number currently. If you go into the Eskom portal, you would see there is a tender that’s currently out in terms of existing contracts that we have for the balance of the smart meters to ensure that we meet the target by the end of March 2027,” Reddy said.
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Eskom loses billions to theft and illegal connections
Eskom is setting ambitious targets to reduce electricity losses, which currently stand at significant levels.
The utility reported 13.5 terawatt hours in energy losses for the 2024 financial year, rising to 14.7 terawatt hours in the most recent year.
Parliament heard that approximately R30 billion is lost annually through electricity theft and illegal connections.
Reddy outlined a phased approach to improvement. “Our proposal in terms of having a full system is that we are looking at having at least a 5% improvement as we start to roll out these on a year-to-year basis,” he explained.
The longer-term goal is more ambitious, with Eskom targeting “at least a 35% improvement by between years 3 to five as we start to roll out in terms of the energy losses.”
The smart meter rollout is being integrated with broader network refurbishment efforts.
Reddy noted that when determining solutions for overloaded infrastructure, Eskom evaluates multiple alternatives including smart meters, demand response solutions, micro grids, and solar installations to find the most cost-effective technical solution.
Eskom expects the smart meters to have a lifespan of 15 to 20 years, with monitoring conducted through a smart metering operating center that tracks performance and responds to alarms.
Transformer replacement policy controversy
Questions arose regarding Eskom’s policy on replacing damaged transformers, with MK Party MP Brian Molefe raising concerns about communities being left without power for extended periods.
Reddy explained that where transformers fail prematurely due to illegal connections or overloading, Eskom conducts audits before replacement.
He outlined a specific requirement that has generated controversy.
“70% of those temper fines that are issued within that transformer zone need to be paid before the replacement of that particular transformer,” Reddy stated.
This policy affects both paying and non-paying customers within a transformer zone, which Eskom acknowledges as problematic given the current lack of granular disconnection capability.
The turnaround time for transformer replacement varies significantly depending on size and stock availability.
“Some of them can take up to 6 months in terms of the replacement if we don’t have the stock, and we have to then go out to the market in terms of procuring these,” Reddy said.
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