Tuesday 28 June 2016

Why you shouldnt purchase more electrical power units/credits than you need on a monthly basis

So, here I was , being a real stingy guy when it comes to buying prepaid electrical units for my flat. I was misering my money this month ( June ) in the hope of making my power last longer ...... Fat chance ! Its June, one of the coldest months of the year ! Of course your units are going to run out, you baldy bandit !!!

The good thing is that I kept a tab of the units I purchased ( via my StanChart mobile banking app ) and I decided to tabulate it and cross reference this with the published tariffs from Zesco website. When the analysis was finished, I came to some conclusions :

1. Stanchart is not robbing me , I receive the correct number of units for the amount of money transacted :-)

2. I didn't realise what impact Zesco tarriffs that come in "tiers" ( or bands ) has on my monthly spend : for starters, the bands are K0.15 for the first 100kWh , K0.31 for the next 200kWh ( more than double the first tier ), and K0.51 for every unit over 300kWh per month. So each time you purchase incremental amounts of prepaid units, the number of units received will be dependant on where your usage on the scale is. Given that, it is advisable to keep your usage ( if possible ) in the lower region ( below 300kWh ) if at all possible. Explore energy saving measures such as turning off lights which are unused, turning off the cooker before the food is finished cooking so that the residual heat can finish off the cooking, turn off the hot water geyser for a suitable period of time, use alternative sources of power such as solar or gas.

3. The most important realisation hit me when I thought of the conscientious people who ensure they have enough units to go into the next month comfortably ( and even into the month after that !! ). These poor folks are not receiving the benefit of paying for  the lower cost units ( K0.15 and K0.31 ) because the excess units they purchase in month 1 are at a premium of K0.51 !!!! Long story short, if you are in habit of overpurchasing units, please keep that to a minimum, otherwise you are losing out on an average of K0.25 per unit ( average price of the lower units is K0.26, and the units over 300kWh are K0.56 thus the "overspend" per unit is K0.25 ! ). This may not seem like much, but if you use an average of say 500kWh per month ( average for a small household ), and you purchase those units in excess in month 1 at the higher per unit cost, your spend will be  K255 instead of K128.33 ( an overspend of K126.67 in that month ! )


I have included above just a sample working of the difference when buying units at the lower cost versus buying units at the higher ( above 300kWh consumption ) cost.

So in conclusion, be a spendthrift when it comes to buying prepaid units, lest you end up using more expensive power in your home !!!

N.B This above analysis can be adapted to any country where the power is prepaid and sold in upwardly escalating"tiers" , and indeed, for any consumption-based service that is prepaid ( e.g prepaid water )

Update : New Tariff Structure in 2017 !!

So Zesco upped the lower cost units limit from 100kWh to 200kWh, and scrapped the middle tier  leaving us with only units costing K0.15 ( below 200 units ) and K0.89 ( above 200 units ).

So if your monthly consumption of units is say 568.2 units, and you decide to buy 2 months worth of units ( 1,136.4 ) at one go ..... Then the first 200 units will be at K0.15 per unit, and the next 936.4 will be at the way higher price of K0.89 per unit !!!! Overspend will be K179 !!!


Bottom line : Its better to buy just the right amount of units from month to month rather than being a hero and buying 2 months worth at a go.



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