Cape Town - Prepaid electricity customers who pay a special “lifeline” tariff could end up paying more for electricity from October 1 if their property is worth more R1 million.
This is when they will have to start paying the city’s general domestic tariff.
The council said this will allow it to reduce the average electricity tariff for the new budget year to 6.6 percent, as opposed to 8.26 percent.
Read: Electricity subsidy on for the poor: City of Cape Town
The lifeline tariff is a subsidised tariff aimed at providing relief to poor households.
Deputy mayor Ian Neilson said: “Price increases from Eskom are having a profound effect on the local economy. With this in mind, it is important that only those customers who are truly indigent continue to be subsidised by other residents.”
Customers in a similar position who had credit meters installed, were moved to the domestic tariff in July 2014.
In future, only households with a municipal property valuation of R300 000 or less, use less than 450 kWh a month on average, including any free electricity, and have a prepaid electricity meter installed, will qualify for the lifeline tariff.
If a customer receives a senior citizen or disabled people rebate in terms of the Rates Policy, or is registered as indigent according to council policies, the property valuation and metering requirements will fall away.
Neilson said the council was aware that it was often retired people who lived in valuable homes, but who had a small income.
“That’s why we are giving them some relief,” he said. Electricity is the council’s largest revenue source, projected to earn about R11.8 billion in the coming financial year.
About 70 percent of this revenue would go to paying Eskom.
The tariff migration proposal is open for public comment as part of the city’s draft budget public participation process.
The city announced on Friday that it would extend the public comment period on the draft budget for 2016/17 for another week, to April 29.
Neilson said it was hoped the extension would give ratepayers more time to scrutinise the document and to contribute insights and suggestions.
Mayor Patricia de Lille tabled the city’s R40.7bn draft budget for 2016/17 last month.
“We’ve had to look very closely at balancing the city’s operational needs with the realities on the ground and the broader context in which we are working,” said Neilson.
Proposed tariff increases would come into effect on July 1.
In general, average tariff increases for 2016/17 are lower than in this financial year.
The highest increase of 9.75 percent, will be for water and sanitation.
The city said where it had not been able to keep tariffs below consumer price inflation, it was as a result of the Eskom tariff increase and the cost of repairs and maintenance, especially for water and sanitation infrastructure.
The city’s draft budget and proposed tariffs can be viewed at sub-council offices and city libraries.
It can also be viewed on the city’s website, www.capetown.gov.za. The final budget will be tabled for approval by the council at the end of next month.
Cape Argus
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