Real Estate Investor Magazine South Africa September/ October 2019 | Page 32

MANAGING
To Pre-Pay or
not to Pre-Pay
BY RIAAN NAUDE
Is it smart to convert from a credit, post-paid meter
to pre-paid? What are the financial impact and risks
involved? This is not as simple as simply doing the
math; however, the math is a good place to start.
I
COSTS
n analysing the Johannesburg’s 2019/2020 approved rates
for a single phase 60A connection directly from the munic-
ipality, it shows that pre-paid is always cheaper than the
post-paid supply. Whilst the approved rates are slightly dif-
ferent for different cities across South Africa, the principles
typically remain the same. Local government is thus trying
to encourage people towards pre-paid meters as it favours
their cash flow situation
There are hidden charges that are not listed in the City's rates
policy, i.e. the vending fees charged by those dispensing
tokens to re-charge the pre-paid meter. Purchasing tokens
costs anything from R0.4045 per transaction and the minimum
purchase value is R15. Purchasing small denominations would
therefore quickly be adding quite a substantial amount to your
account in transaction fees. Buying pre-paid energy from a
sub-vendor can escalate charges even more. Amounts as high
as R25 per vending transaction, or even a fixed percentage
ELECTRICITY – RESIDENTIAL 60A SINGLE PHASE
30
Monthly Consumption Post-Paid Bill Pre-Paid Credits Pre-Paid Cheaper by
200 kWh R 817.00 R 278.84 193.00%
500 kWh R 1219.24 R 727.85 67.51%
1000 kWh R 1988.59 R 1639.00 21.33%
5000 kWh R 9041.39 R 8928.20 1.27%
SEPTEMBER/OCTOBER 2019 SA Real Estate Investor Magazine