The National Energy Regulator of SA (Nersa) is probing a complaint against the City, after the GOOD Party submitted a formal request asking it to reject the municipality’s electricity rate hike which came into effect on July 1.
The City had approved electricity tariff increases of 17.6%, while Nersa had approved a guideline increase of 15.1% for all municipalities.
The basis for this, Nersa explained, is Eskom's increase of 18.49% for bulk supply to municipalities. The bulk purchases represent 74.23% of the total costs incurred by licensees.
Last week Nersa ruled that the eThekwini Municipality cannot impose an 18.49% tariff increase for electricity and instead must stick to the 15.1% increase it had recommended.
Good Cape Town councillor responsible for Finance, Anton Louw, said: “Following Nersa’s rejection of eThekweni’s proposed tariff hikes, the City of Cape Town residents are now facing the highest tariff increase in the country.
On June 30, 150 units would have cost City of Cape Town residents R162 and on July 1 the same amount of units cost R190. Cape Town households using more than 600 /k/ WH per month pay more than double the Nersa regulated tariff.
“Eskom is now permitted to charge 173.80c per kilowatt hour (kWH). Cape Town, for example, charges residents between 298.30c k/WH and 362.72c k/ WH. Good understands that municipalities must raise revenue in order to operate essential basic services, but in the current financial climate, with many citizens battling to feed their families let alone pay for electricity, the mark-ups must be fair, affordable and just.”
The City has meanwhile defended its decision.
“The City spends about 70% of its tariff income to buy electricity from Eskom, with the remaining 30% covering the costs of a reliable electricity service and plans to end load shedding. Eskom’s massive 18.5% tariff hike is now impacting all metros and municipalities in South Africa.
For the City, it means it costs the City 18.5% more to buy the bulk power from Eskom to distribute to City customers.
“Nersa’s tariff benchmarking methodology has already been reviewed and ruled unlawful in two High Court judgments. Nersa is applying the benchmark methodology now for the last time. In terms of the Electricity Regulation Act, Nersa must allow an efficient utility to recover its costs. It has again failed to do this. The City would run an estimated budget shortfall in excess of R500 million based on Nersa’s guideline tariff increase. This shortfall would make it impossible and unsustainable for the City to run a reliable electricity service and implement plans to end load shedding.
“The City’s electricity tariff of 17.6% was legally approved by council in terms of the Municipal Finance Management Act in May, following the public participation process,” the City’s mayco member for energy, Beverley van Reenen said.
Stop CoCT founder Sandra Dickson said she had also lodged a complaint with Nersa.
“Eskom gave their users an increase of 18% in April, however what is not known widely is that the Eskom tariff in Cape Town is a huge amount less than the City’s tariff, therefore the 18% added to Eskom clients is not as hurtful as the 17.6% added to a much higher tariff that the Capetonians are paying.”
Nersa spokesperson Charles Hlebela confirmed they had received the complaint.
“Please note that section 15(2) of the Electricity Regulation Act, 2006 (Act No 4 of 2006), states that ‘A licensee may not charge a customer any other tariff and make use of provisions in agreements other than that determined or approved by the Regulator as part of its licensing conditions’. Nersa will investigate the complaint in line with its dispute resolution procedure to establish whether the City of Cape Town is in breach of this section or not,” he said.
Cape Times