Using figures from 10 years ago in 2004, almost 200000 MWh of electricity were sold to more than 7000 customers. Most customers are residential (94%) but they use less than 18% of all electricity sold.
There are over 170 licensed electricity distributors in South Africa. Eskom serves 48% of customers in the country and municipalities serve 52%. The current position in the electricity distribution industry is the result of its historical development. Before 1994, municipalities distributed electricity in historically white areas, while Eskom covered historically black townships and some of the former so-called homelands.
The municipalities do not only have residential customers, they also service industrial/manufacturing, commercial and even mining companies but Eskom itself, measured on capacity, distributes significantly more electricity to customers directly than all the municipalities put together.
Something that must be of major concern is the position of smaller municipalities across the country who use electricity to generate their own revenues, fail to maintain their infrastructure and then do not pay Eskom for the electricity sold. As at July 2014, Eskom was owed R2.9 billion by rural municipalities mostly in the Free State and Mpumalanga.
There is no doubt that South Africa’s economy is one of the most electricity intensive. Despite the movement towards a bigger services sector, inherently less energy intensive than mining or manufacturing, SA economy’s energy intensity has grown. In fact, energy intensity doubled over the period 1990 to 2007 due to increases in energy-intensive manufacturing activities in the 1990s, particularly in the area of aluminium smelting.
The economy is also characterised by a small number of industrial concerns consuming almost half of the electricity. Most of them are members of The Energy Intensive User Group (EIUG). Its 31 members account for 44% of all electricity consumed in South Africa but, collectively, they also have a collective annual turnover of R741 billion, more than 20% of South Africa’s GDP and employ nearly 600,000 South Africans. Almost half the EIUG’s members are in mining and a third are manufacturing concerns. Of importance here is that across the EIUG’s membership, a significant component of their annual expenditure, nearly 20%, is made up of electricity. This would indicate that they are both heavily dependent on electricity but are also very exposed to increases in the price of electricity. It would be a mistake to understate the importance of most of the EIUG membership. The EIUG membership represents much of what South Africa exports to the rest of the world. These exports finance the utter dependence on imports of industrial equipment necessary if South Africa want to grow this economy. Moreover, many of them form an important base upon which the economy rests.