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Prepaid vs Postpaid Electricity: Weighing The Pros, Cons, And Costs

Jun 11, 2024 | Uncategorised

In the ever-evolving landscape of electricity provision in South Africa, consumers are faced with a choice between prepaid and postpaid metering systems. While both options have their merits, it’s crucial to understand the pros, cons, and associated costs of each to make an informed decision that suits your unique needs and preferences.

Let’s breakdown what each option has to offer, the more significant challenges, as well as a cursory look at the average costs involved.

Let’s Talk Prepaid Electricity

The foremost advantage of prepaid electricity is the ability to monitor and control your usage in real-time. By purchasing electricity units in advance, you can easily track your consumption and make adjustments to avoid unexpected high bills at the end of the month. This level of control is particularly beneficial for those of us on a tight budget or with fluctuating incomes.

You also don’t have the monthly connection fees associated with postpaid electricity, which is a win.

However, prepaid electricity is not without its drawbacks. A significant concern that you need to take into account, is the potential for prepaid providers to add markups on the electricity units. This can result in paying more than the standard tariff set by municipalities. Additionally, the lack of regulations controlling the resale of electricity means that some prepaid providers may charge exorbitant fees, including management and administrative costs.

Another downside of prepaid electricity is the inclining block tariff structure, where the price per unit increases as more units are purchased. This can be problematic for low-income households or those with intermittent incomes, as they may end up paying a higher price for electricity due to the need to purchase units in advance.

So, Is Postpaid Electricity The Answer?

Some of you may never have referred to traditional services as ‘postpaid,’ however all this merely indicates is the type of service when you are charged for your electricity usage on a monthly basis after you use it. Essentially, you don’t need to worry about having money for electric service on a daily basis. You can simply continue to use power and deal with the bill at the end of the month. Once you have been on the receiving end of your bill for a few months, you get a sense of what your bill usually sits at, and in this way, budget your expenses more effectively, knowing what you should be charged at the end of the month.

It’s also worth noting that as a postpaid customer, you aren’t subject to the potential markups and fees associated with prepaid providers. You are, however, subject to the monthly network capacity charge that Eskom charges to cover the cost of its transmission and distribution network and other expenses, including customer service. This fee is payable whether electricity is used or not, as it recovers the cost of assets that are installed by Eskom and can end up adding a high cost to your monthly bill.

That isn’t to say that postpaid electricity is without its challenges. One serious disadvantage is the risk of falling into debt if your electricity bills isn’t paid on time. This can lead to additional fees, penalties, and even disconnection of service. Postpaid customers also lack the real-time monitoring and control over their electricity usage that prepaid systems offer.

The Average Costs Associated With Prepaid And Postpaid Electricity

The cost of electricity in South Africa is determined by the tariff structure set by municipalities and utility companies. The average cost per unit of electricity is the same for both prepaid and postpaid systems. That said, it’s important to note that the total cost can vary depending on factors such as location, consumption patterns, and any additional fees or markups charged by prepaid providers.

According to the National Energy Regulator of South Africa (NERSA), the approved Eskom prices increases of 18.65% for 2023/24 and a 12.74% increase that started in 2024. This hike took the average tariff in South Africa went from roughly R1.84 per unit (kWh) to around R2.07 kWh. This average is meant to reflect the national average cost of electricity, however, this figure can fluctuate based on annual tariff increases and the specific tariff structure applicable to your area.

Choosing The Right Option For You

When deciding between prepaid and postpaid electricity, it’s essential to consider your individual circumstances, including your budget, income stability, and preference for control over electricity usage. If you value real-time monitoring and the ability to manage your consumption right down to the unit, then prepaid electricity may be the better choice.

Of course, we do suggest that you research which prepaid service you go with in order to make sure that you’re getting a fair deal and avoiding excessive fees or markups.

Our advice is to take the time to work out the rate you pay and the kW that you use for postpaid electricity. You can then add the connection fee on top of this average monthly cost so that you can see if it will be more or less overall.

This is the likely the best way to make an informed choice on which option to go for, however we have to say that if you prefer the convenience of paying after consumption and have a stable income, postpaid electricity could be more suitable regardless of the amount.

Feeling Informed?

The choice between prepaid and postpaid electricity in South Africa can be quite a personal one, with both options offering their own advantages and disadvantages. By understanding the pros, cons, and associated costs of each system, you can make an informed decision that empowers you to manage your electricity consumption and expenses effectively.

Hopefully, seeking advice from a trusted source, such as the AA Inform website, can help you navigate the complexities of electricity provision and make an informed decision that aligns with your needs and budget.

If you find that in the course of researching these options, you might as well consider investing in solar power, then we can help you with that, too! Simply click here to find out more about what you need to do in order to take that very first step towards a solar-powered home.

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