Load shedding – the real cost to South Africans

Load shedding is a major inconvenience to South Africans, and can cause anxiety, frustration and a sense of hopelessness – not to mention substantial financial loss.

This article examines some of the real financial costs of load shedding to South African consumers, and provides some tips on how to minimise these.

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Power surge claims have increased

Pamela Ramagaga, the general manager of insurance risks at the South African Insurance Association (SAIA), says an increase in power surge claims on electrical or electronic goods has led insurers to adjust their premiums to reflect the increased risk.

In some instances, power surge cover, which used to be free of charge, is now being added to premiums.

“We have seen increases of more than 60% in the number of power surge claims this year, compared to 2021,” says Philippa Wild, head of commercial underwriting at Santam.

“Not all power surge claims are due to load shedding, but we do see a lot of claims during periods when load shedding is experienced.”

“Load shedding itself is not an insurable risk,” Wild says, “so we do not register a claim as such. However, the reality is that load shedding has an immense impact on consumers and businesses, who must cope with damage to appliances brought on by power surges and dips, as well as increased crime-related risks that arise due to faulty security systems.”

Non-life insurance has become more expensive

The increased risk of burglaries and theft in the event that alarm systems don’t activate, preventing armed response units from responding, has increased the risk of looting, Wild says, resulting in an increase in claims.

If fire detection systems fail, there will also be a slower response to fires, and the impact of fire losses will increase. In addition, there will be more motor vehicle accidents due to non-operational traffic lights, which will place pressure on insurers and the Road Accident Fund.

Dawie Roodt, director and chief economist at the Efficient Group, says the result is that short-term insurance will become more expensive, due to a myriad of claims.

Households forced to pay for solutions

Many people have had to acquire alternative power generation equipment, such as UPSs and inverters, to continue working from home or run their small businesses, says Roodt.

“Solar panel installation can cost upwards of R160,000 to keep a household of four going,” he says. “However, this doesn’t necessarily solve the problem, as the effectiveness of solar power depends on the weather in your area.”

Households are also having to pay double for their security, says Roodt – once in taxes, and once to pay private security personnel to keep them safe in crime-riddled areas. There are currently three times more private security personnel than police force members in South Africa.

“Load shedding has made private security even more of a necessity, as long power disruptions also mean that security features like electric fencing are out of order,” he says.

Businesses are affected, which hurts employees

While South Africa sits with its highest unemployment rate in history, many companies are forced to save costs by retrenching staff to keep their businesses going. This means more households are without an income, or with less income than before, says Roodt.

This leads to financial hardship and stress, along with diminished trust in the government and state-run institutions like Eskom.

“The highest cost to our economy – and, eventually, households – is the drop in confidence that international investors experience,” Roodt says.

“In the past, foreign investment has played a considerable role in South Africa’s development, growing the economy and creating jobs. Once investors understand what load shedding means, they are less keen to invest in South Africa by bringing their business here.”

Tips for consumers

Santam has provided some useful tips for consumers regarding protecting their appliances against load shedding-related power surges.

• Make use of surge protection. Electric surges are one of the main causes of damage to equipment during a power outage. Have a surge protection device fitted to your electrical distribution board or at the power outlet to the electronic device.
• Ensure that your alarm system is in working order and that the backup battery is fully functional to provide power to the system in the event of load shedding.
• Keep a spare torch or headlamp handy. Keep a torch in your car if you arrive home at night during a power outage. Most smartphones have a built-in torch or torch app for use as needed.
• Have emergency contact information to hand. Save emergency contact information on your phone but also keep a paper copy safe and accessible. This should include contacts for emergency services such as the fire department, police and/or medical services. Also include the contact information of friends and/or family, along with insurance information. 
• Charge your cell phone, laptop and tablet ahead of scheduled blackouts. Charge them again as soon as possible after the power returns. Also have an emergency phone charger (such as a power bank) close by, which comes in handy during extended power outages.
• Use gas for cooking and lighting. Get a small LP gas bottle and lamp. This will give good quality lighting for a large area and can also be used for cooking and boiling water. Consider keeping boiling water in a thermos or preparing meals before a scheduled blackout.
• Keep bottled water. Store frozen bottled water for emergencies, which can help to keep food cold during a power outage, and will not spoil.
• Unplug your devices. Consider any electrical connection as live during a power outage, as power can return at any time. Unplug any electronic devices or equipment, including telephone cables, or switch them off at the wall. This will avoid damage caused by power surges that may occur when electricity is restored.
• Back up your data: It’s always important to back up data in case of a hard drive crash or unforeseen electrical fault. Cloud-based backups are very convenient and are mostly automated, which means that you have one less thing to worry

Tip: If retrenchment or reduced wages have caused you to become over-indebted, access help in the form of debt consolidation. Read more here.