Free Basic Electricity Policy Changes You Should Know

Free Basic Electricity Policy Changes are once again in the spotlight as South Africa reviews its Free Basic Electricity (FBE) framework. Minister of Electricity and Energy Kgosientsho Ramokgopa recently confirmed that the government is considering a fourfold increase in free power allocations for poor households.

This decision could reshape energy affordability in Gauteng and across the country. For over two decades, the allocation has remained fixed at 50kWh per month, despite rising electricity costs and growing household needs.

Why Free Basic Electricity Exists

The Free Basic Electricity Policy was introduced in 2003 to ensure indigent households could access a small, reliable supply of power. It was meant to cover basic needs such as:

• Lighting
• Small appliances like kettles and irons
• A radio and black-and-white television

At the time, the 50kWh monthly allocation seemed reasonable. However, South Africa’s energy landscape has since changed dramatically.

Read more in our feature: Meet the New CEO Running DStv to learn about the company’s new leadership direction.

Electricity Prices Have Risen Sharply

Electricity tariffs have increased by 177% in the last decade, far outpacing inflation. For many households, this has made power unaffordable.

At the same time, unemployment and poverty have grown, increasing reliance on subsidies. With these pressures, the original 50kWh allocation is no longer enough to meet even basic household consumption.

The Minister’s Proposal: From 50kWh to 200kWh

Minister Ramokgopa has proposed increasing the free allocation from 50kWh to 200kWh per month.

“The review and revision of the FBE framework aims to increase the current 50kWh amount to better match the actual consumption of about 200kWh for a low-income household,” said Ramokgopa.

If implemented, this would be the most significant change to the FBE programme in 21 years.

Expert Opinion on the Current Failures

Energy analyst Chris Yelland has highlighted serious failures in the current system.

• Around 10 million households qualify for FBE.
• Yet, 80% of them do not receive it.
• Mismanagement, poor registration systems, and corruption are to blame.

“It is effectively robbing the poor and using the money to benefit the municipality,” Yelland told Radio 702.

This means that even if allocations are increased, the benefits will not reach households unless the administration improves.

Gauteng Case Study: The City of Johannesburg

The City of Johannesburg receives funding for 950,000 indigent households. Shockingly, only 30,000 households are on its indigent register.

This leaves hundreds of thousands of poor families without their entitled free power. Funds intended for electricity subsidies are often diverted to other municipal services.

This systemic failure undermines the credibility of the FBE system and raises questions about accountability.

Eskom’s Role in Free Electricity Policy Changes

Eskom also plays a direct role in distributing FBE. However, the gap between eligible and actual recipients is stark:

• 2.1 million customers qualify for FBE.
• Only 485,000 receive it.

This leaves more than 1.6 million poor households excluded from the safety net.

Recommendations from Researchers

The Public Affairs Research Institute (PARI) has studied electricity access trends. In 2023, it recommended a 350kWh free allocation, arguing that this would reflect modern household consumption.

This shows how outdated the current 50kWh allocation has become. PARI’s findings reinforce the need for an urgent review.

Microgrids: A New Solution for Indigent Households

One of the government’s proposed solutions is to roll out microgrids powered by renewable energy.

These small-scale facilities combine solar, wind, and batteries. They are cheaper and quicker to deploy than expanding transmission networks into rural or informal settlements.

Ramokgopa has said microgrids can supply electricity at “substantially less” than standard tariffs. This makes them an attractive option to expand free allocations without draining the national fiscus.

Smart Meters and Better Targeting

The government also plans to expand the smart meter rollout. Smart meters would allow municipalities and Eskom to directly load free electricity allocations onto households’ accounts.

This reduces the opportunity for fraud and ensures indigent households actually receive their benefit. It also helps monitor consumption more accurately, which is key in managing subsidy budgets.

Find out how to qualify in our guide: Eskom Urges South Africans to Register for Free Electricity.

The Link Between FBE and Load Reduction

Load reduction is used in areas with many illegal connections, where the grid becomes overloaded.

The government hopes that expanding FBE will reduce incentives for illegal connections, making it easier for Eskom to end load reduction. Ramokgopa has suggested that these interventions could end the practice by late 2026 or early 2027.

Financial Pressures on the System

Expanding FBE comes with financial risks. Municipalities already struggle with non-payment, corruption, and infrastructure backlogs.

At the same time, Eskom has applied for significant tariff increases to stabilise its finances. While NERSA has moderated these requests, households still face double-digit annual hikes.

Balancing affordable access for the poor with financial sustainability for Eskom remains a key challenge.

Lessons from Global Energy Subsidy Reforms

International studies, including those by the World Bank and IMF, highlight the risks of poorly targeted subsidies.

Energy subsidies can:

• Encourage wasteful consumption.
• Place a heavy burden on government budgets.
• Fail to reach the poorest households.

The World Bank recommends phasing out blanket subsidies while providing direct, well-targeted support to vulnerable groups.

South Africa’s FBE reform must learn from these lessons to ensure both equity and efficiency.

What Gauteng Residents Should Watch

For residents of Gauteng, these proposed Free Electricity Policy Changes could mean:

• More units of free electricity each month.
• Reduced reliance on illegal connections.
• Better accountability through smart meters.
• Expanded use of renewable energy through microgrids.

However, the success of the reform depends on municipalities fixing their indigent registers and ensuring transparent use of funds.

Stay informed with our report: Eskom Issues Urgent Warning to South Africans about the latest power supply concerns.

A Turning Point for Free Basic Electricity

The Free Basic Electricity system has been in place for more than 20 years. While it was a progressive step in 2003, it has fallen behind today’s realities.

Free Electricity Policy Changes are urgently needed. If implemented properly, the increase to 200kWh could relieve pressure on households and reduce electricity theft. But without better administration and accountability, millions of poor families will remain excluded.

South Africa stands at a turning point. The decisions taken now will shape both the fairness and sustainability of electricity supply for years to come.