While delivering his speech to the full council on Thursday, Plato said that the City makes no profit from the sale of electricity.
“There is also a lot of misunderstanding around the fixed service charge on the home user tariff.
"This is a monthly service charge aimed at recovering the cost of maintaining the service connection. All users, regardless of how much or how little electricity they use, require a stable and well-maintained service connection.
"It is payable by all property owners whose residential properties are valued above R1million,” Plato said.
He said before the tariff was introduced, all residents using less than 600 units a month were exempt from this service charge.
“This included customers living in high-value properties who were not financially vulnerable. This was not sustainable and unfair to lower-income residents using more than 600 units, who were in effect subsidising wealthier customers using fewer than 600 units.
"The Home User tariff seeks to correct this, and also has a lower unit cost for the first 600 units of electricity to offset the fixed charge,” he said.
Last month, the Cape Argus reported that lobby group DearSA was working closely with Stop CoCT to try to get the National Energy Regulator of South Africa (Nersa) to hold another round of public hearings on the tariff hikes.
Residents have been forced to dig deeper into their pockets after the new tariffs came into effect this month. They range from 8.88% to 13.37%.
The hike will apply to residents who have a prepaid meter in a house worth more than R1m or have a credit meter regardless of property value.
“The Nersa guidelines on tariffs allow for fixed charges to be implemented.
"This model of recouping fixed charges separately has also been implemented by Eskom and other metros in South Africa. It is internationally accepted as the norm for recovering fixed costs incurred in the rendering of services,” Plato said.
Stop CoCT founder Sandra Dickson said: “The mayor talks about the home user charge which is for households over R1m. This is factually incorrect as people in properties of over R400000 without a prepaid meter also pay the home user charge.
"The mayor saying that the charge is meant for the more affluent people is simply not true. Stop CoCT cannot see that people in properties from R400000 upwards are necessarily affluent. We urge the mayor to publicly withdraw this untrue statement.”@MarvinCharles17