How do Incline Block Tariffs work?

What are Incline Block Tariffs (IBT)?

Incline Block Tariffs divide the electricity price into several steps or blocks.
You may have heard about Incline Block Tariffs (IBT) and wondered what it is all about. Incline Block Tariffs (IBT) were invented by Eskom/NERSA as a way to make electricity affordable for those who use little and also discourage consumption. It may seem quite complicated but actually it’s quite simple. Here’s a straightforward and to the point explanation:

The first block of electricity is at the lowest price. As the customer purchases more electricity during the month, the electricity bought will eventually fall in block two which is a bit more expensive. This process repeats automatically as the customer purchases further electricity to move into block 2. At the end of the month, the history is reset and the customer will again start the next month from block 1.

The process to move from the one block to the next is automatic and depends only on the amount of electricity that is acquired by the customer. The movement to the next block is not at all affected whether the purchases are spread over many transactions or if all the electricity is part of one transaction. Because the blocks increase in the price, customers can save money by not buying more electricity than what they will use during the month. It is much better to wait until the next month and start to buy again at the low price. Below is a picture to show how these blocks are divided for the purchase total during a month: Electricity is measured in kWh along the horizontal line at the bottom. The first electricity obtained for the month is always counted from the left and follow the line as electricity is purchased during the month. As more electricity is purchased beyond the step points, that portion of electricity will be at the higher price. Remember the total electricity bought during the month determines the steps, not the date or the number of purchases.

So it has nothing to do with how many times you purchase electricity in that month, but rather the total amount of units which you purchase. This is also why you should only buy enough electricity for that month, and not excess, as you will be charged at the higher rate. Rather aim to buy only what you will need, and you will save yourself money. At the start of the next month, your purchase history gets completely reset and you start with the tariff rate from block one again. That will be a good time to top up at the lower price.

Incline Block Tariffs and sub-letting

Where the landlord pays council on an Incline Block Tariff, and there are multiple tenants on a property, the landlord must now decide how the blocks are to be divided among the tenants. In some cases, each unit will be limited to buy their share of that block (for instance, if the first block is 350kWv and there are 5 flats, each will be allowed to buy 70kWh at the lowest rate). In other cases, the landlord might decide to divide the blocks in a different way. It is always good to discuss this with your landlord to understand how blocks are divided. 

Why should you need to know how IBT works?

“Basically, this means that the more electricity you buy in a month, the more you pay. In the case of prepaid customers, it has nothing to do with how much you actually use – the cost is purely based on how much you buy. This means that electricity is one of the rare cases where it’s really not a good idea to buy in bulk. Rather buy from week to week, or buy just enough at the beginning of each month to keep you going. It’s cheaper to top up with a few units at the end of each month than to buy enough to last you for two months.” 

Incline Block Tariff Rates

Incline Block Tariffs have been implemented for most residential customers who receive electricity from Eskom. Both prepayment and conventional customers have the same block tariffs and pay the same amount for electricity.