[RELATED: City of Cape Town does not make a profit on the sale of electricity]
An inspect of the municipal tariff increases published by the City reveals some shocking facts.
It is customary to reflect an increase as a percentage. This provides an accurate indication of the magnitude of an increase. However, instead of using percentages, the City used the actual increases in cents.
For example, on its pamphlet on tariff increases for 2021 on its website, under electricity for Home User Consumers for the range 0 to 600kWh, it is stated that the tariff has been increased by 25c per kWh, which raised the tariff to R2.09 per kWh.
Similarly, for consumption exceeding 600kWh, the tariff has been increased by 34c per kWh, which places the new tariff for this band at R2.89 per kWh.
But the City fails to state that the tariff for both these bands is increased by a whopping 13%.
Bear in mind that the public sector was only granted an annual increase of 1.5% per annum.
Further, the City claims that its municipal rates will only be increased by 4.5%. This is utter rubbish. This increase appears to be acceptable, since the annual inflation rate hovers around 4%.
However, looking closely reveals a different picture.
It seems that the city cunningly ignored the impact of the 2021 General Valuation (GV2021) Roll on the municipal rates collected by the City. The GV roll published every three years is usually based on the annual house inflation rate over the same period. GV2021 is based on the house inflation rates from 2018 to 2020.
The house inflation rate in the metropole was approximately 6.5%, 4.0%, and 3.5%, respectively, for 2018, 2019 and 2020. This crudely translates to an increase in house values of 15% from 2018 to 2021.
The publication of GV2021 roll will generally increase residential property values by at least 15%. The revenue collected from municipal rates will be based on the increased property values.
The City failed miserably to take this massive increase in the base value of properties into account when publishing its revenue collected from municipal rates. Note, a 4.5% increase on top of a 15% increase in property value will translate to a massive increase of 20% in municipal rates collection, not based on the misplaced increase of 4.5%.
Is the latter the reason why the City has been mum on the GV2021 prior to July?
The home user charge for electricity and the fixed basic charge for water that was introduced as an interim measure have become a permanent item on our utility bills, despite our dams bursting at their seams.
In conclusion, closer scrutiny of the City’s tariff increases confirms that these are grossly understated and misrepresented. Is the City continuing to pull the wool over the eyes of residents? You be the judge.
[Read the City’s reply here: “City of Cape Town’s tariff and general valuation explained”]
* Adiel Ismail, Mountview.
** The views expressed here are not necessarily those of Independent Media.
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