By Shirley Salvoldi
This report reviews global approaches to electricity tariff design, focusing on cost of supply studies and other methods across various regulatory and market contexts. It examines current trends, technological impacts, cost drivers, affordability, tariff structures and customer categories, highlighting how these challenges are addressed in different countries.
The report concludes with recommendations for improving cost of supply practices in South Africa to support the goal of effective and efficient electricity tariff structures. Cost of supply (CoS) or cost-to serve (CtS) studies are the standard basis for electricity tariff design worldwide, though their application varies with local policies and regulations.
In regulated markets (e.g., USA, Canada, South Africa, Brazil, EU), CoS/CtS is the default approach, while reforming or developing markets use it partially, often alongside tariff subsidies. Market-based systems depend on CoS for network related(wires infrastructure) tariffs, but energy purchase prices are market-driven.
