South Australia's blackout compensation payments have been slashed.

The Essential Services Commission of South Australia (ESCOSA) has cut a previous $100 payment for households which experience blackouts of more than 12 hours.

The Guaranteed Service Level (GSL) payments will now only go to customers who experience more than 20 hours in blackouts throughout a year.

“Customers told us that while they broadly like the scheme, they wanted it far better targeted to address those who experience persistent poor reliability, as opposed to the one-off,” ESCOSA chief executive Adam Wilson said.

“Really importantly, given that we all pay the cost of the scheme, they said they didn't want to pay so much.

“We looked to address those two concerns through the reframing of the scheme.”

ESCOSA hopes the changes will encourage network improvements by the distributor, SA Power Networks, focusing on areas with reliability issues.

The changes are expected to reduce the cost of the scheme by around 40 per cent, or about $5 million a year.

GSL penalties paid in 2016-17 by SA Power Networks hit a record high of $28.4 million following a statewide blackout in December 2016.

The distributor will also have to report more comprehensively on its performance, and make more disclosures to the public.

A $25 dollar payment to the first person who reports a broken street light will remain.

One of the submissions in ESCOSA’s public consultation period came from a confidential author who made 14,000 reports of faulty lights in an effort to collect as many payments as possible.

There are also concerns that the scheme encourages people to smash street lights in order to claim payments.