Cape Town – The City of Cape Town says it would have preferred to have no rates and tariff increases this year because of the Covid-19 economic impact, but noted the "lowest increases for a metro in South Africa" as from July 1.
Kevin Jacoby, the City's chief financial officer, said the "conservative" increases amount to 4% for rates, 4.8% for electricity, 4.5% for water and sanitation, and 3.5% for refuse removal.
Jacoby said the City is dependent on the income from rates and services to fund the delivery of water, sanitation, electricity, clinics, traffic lights and fire service, among others.
"If it were at all possible, the City would have preferred to have no rates and tariff increases this year because of the Covid-19 economic impact on the people of Cape Town.
"But as it is, the cost of providing services outpaces the income we get from rates and tariffs, which is used to pay for the provision of services.
"The City has experienced increases in its input costs across the board, such as from Eskom for the bulk electricity that the City sells on to its customers. Some 65% of the income from the electricity tariff goes to buying electricity from Eskom.
"We have therefore managed to keep increases conservative by cutting costs and expenditure where possible and changing programmes and plans while at the same time, safeguarding service provision at the highest levels.
"All income received from rates and tariffs is used for the provision of basic services, which is our main mandate as a municipality. We do not budget for a profit on this income."
Jacoby said the City has made R3.3 billion available for rates and services assistance in the new financial year. Those severely impacted financially by Covid-19 can contact the City to find out more about the relief options available.
Interest-free payment arrangements are available for those who qualify.
"The Covid-19 impact on the municipality is about R5.7 billion (to date and projected). We have increased our capital budget for service delivery-related infrastructure to R9.6 billion in the new year to help boost Cape Town’s economy and local livelihoods.
"Like some other municipalities in South Africa and abroad, our water and electricity tariffs have both a usage and a fixed part, which together form the overall tariff that helps pay for service delivery.
"In essence, the fixed part of the tariff is to ensure we can rely on a certain required income stream for the maintenance and supply of electricity, water and sanitation, irrespective of how much or how little is used. This ensures a fairer distribution of costs to all consumers.
"The usage part of the tariff is where you can reduce your consumption. For instance, the electricity service charge was reintroduced some years ago, we dropped the usage price per unit of electricity."