Implementing time-of-use tariffs in RSA: the Eskom experience

In 1984, Eskom emerged from a government enquiry into the pricing of electricity in South Africa to find that the world had not cooperated with the forecasters. There was an over supply of electricity. Capacity additions had outgrown demand, and the timetable for electricity shortages had been pushed out from the seventies far into the late nineties. The author describes how as a result, top management decided it was time for a new and revitalised approach to marketing electricity. It needed to break the self-defeating cycle of increasing prices to recover the costs of newly commissioned power stations which would push demand down even more. Management believed then, and even more so now, that if demand for electricity can be stimulated in the short run Eskom will be able to operate its new base-load units at their most efficient levels, derive revenue from increased sales, and hold down price increases. This, in turn, will reinforce growth and stem the erosion of demand.