Electricity increase on the cards for Cape

By Lindsay Dentlinger

Ratepayers should brace themselves for a whopping 33,3 percent increase in the price of electricity from July, the city council announced on Monday.

Effectively, that means ratepayers will be forking out 54 percent more for electricity than they were two years ago, it emerged today when the draft city budget for 2009/10 was tabled.

And the electricity increase is not the only one facing already stretched home-owners, although the others are significantly less harsh when taken alone.

Other proposed increases include:

  • 8.5 percent for residential property rates.

  • 15.8 percent for commercial property rates.

  • 10 percent for water.

  • 7 percent for sanitation.

  • 10 percent for refuse removal.

    The draft budget, tabled by mayoral committee member for finance Ian Neilson, totals R23,8-billion, including a capital budget of R5,5bn.

    The draft budget is based on an estimate of an overall consumer price index (CPI) of 8 percent.

    Neilson said the electricity tariff increase was to compensate for the still unknown bulk electricity charges from Eskom, which he expected to be increased by between 60 and 70 percent. He suspected Eskom was delaying the announcement before the national elections.

    The result, Nielson said, was that the city had had to draft a provisional electricity budget based on these assumptions.

    The city would probably have to redraft this part of the budget before the new financial year, once it received notification of the new Eskom tariffs.

    The draft budget assumes that Eskom's base tariff will increase by 27.9 percent, plus an energy tax of 2c per kilowatt hour (kWh), leading to an effective hike in Eskom tariffs of 35.9 percent. Neilson said the city was proposing a differential in-crease to limit the impact on the "lifeline tariff" used by poorer consumers, to only 9 percent.

    The city was also proposing a differential rates increase for residential and commercial property.

    The higher commercial rate would provide additional income of R112-million per year, so helping the city to compensate for the scrapping of the regional services council (RSC) levies - a business tax through which the city was generating R1bn when it was halted two years ago.

    There is, however, some good news for senior citizens and the disabled, who will enjoy a rates rebate if their monthly income is less than R8 000.

    In 2006, only households with a monthly income of lower than R2 400 enjoyed rebates.

    What does go up is the limit for a 100 percent rebate - from a monthly income of R2 880 to R3 000 a month.

    Neilson said the city had noticed a slide in payment levels over the past six months which he attributed to the current harsh economic circumstances. This, he said, was reversing the payment gains made by the multiparty government over the past three years.

    This had led the city to moderate rates and service increases, especially for those with lower incomes.

    The city estimates a total revenue for 2009/10 of R16.82bn, an increase of 8,6 percent over the current year.

    But they could not relent on aggressively pursuing its development programmes to stimulate the city economy.

    New infrastructure developed over the past three years was now affecting the city's operating budget in the form of interest and depreciation charges, and reducing the net cash available for operations. The city is proposing an operating budget of R18,3bn - compared to R15,8bn this financial year.

    In the coming financial year, the city's staffing bill will account for 31 percent of its total budget. Staffing has grown significantly because of a drive to fill posts across the board over the past three years.

    Neilson pointed to the fact that pay parity had, however, come at a higher cost than anticipated and said trade unions had demanded a 26 percent salary increase for city staff.

    He again bemoaned the R100m less in the equitable share from the national fiscus than had been previously promised.

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