Executive Mayor Stevens Mokgalapa said the City would resume billing residents according to the new structure and reimburse prepaid meter consumers from the beginning of next month.
He was addressing journalists at Tshwane House after Nersa approved the City’s application to increase electricity tariffs by 13.07% for the 2019/2020 financial year.
“This resolves a long-standing challenge which has affected residents negatively as a result of the inconsistencies on their billing,” he said.
Nersa spokesperson Charles Hlebela said the regulator raised concerns about electricity losses and a lack of proper consultation before tariff increases. “The City must provide Nersa with an energy losses reduction plan to ensure their energy losses are reduced,” he said.
The City was also ordered to use a minimum 6% of its electricity revenue towards repairs and maintenance to reduce the impact of energy losses.
Hlebela said that in future the City needed to conduct proper consultation.
The approval process took time after Nersa questioned the legality of the City’s tariff restructuring.
In terms of the City’s restructuring of electricity pricing, residential customers would have been levied a monthly fixed tariff at R56, while those paying for agriculture at R250. The proposal to council was R120 for residential consumers and R610 for agriculture, but that was amended.
On July 11 the regulator convened a public hearing at which Nersa’s chief executive Nomfundo Masiti raised issues regarding the absence of a study to back up the City’s case of restructuring of power pricing.
Hlebela said: “The energy regulator ordered the City to undertake a cost of supply study when restructuring their tariffs.”
Mokgalapa said the City would comply with the Nersa’s directives, which included providing the regulator with a specific, measurable, achievable, realistic and time-bound energy losses reduction plan. “This will ensure that energy losses are reduced to Nersa benchmarks. An appropriate budget will be allocated and spent in support of this,” he said.
The implementation plan and its budget would be monitored on a quarterly basis and reported to Nersa bi-annually starting from September.
“The City will ensure that it undertakes a thorough public consultation process prior to the submission of the tariff application to Nersa as required by the Municipal Financial Management Act,” he said.
The City was awaiting clarity from the regulator regarding the date of implementation and the reimbursement process it should follow.
In addition, Mokgalapa wrote to Nersa chairperson James Modise requesting a meeting to address the challenges the City experienced during the impasse.
“The City takes this opportunity to apologise to residents for the inconvenience and confusion caused in arriving at this juncture,” he said.
AfriForum’s head of local government affairs Morne Mostert said the lobby group welcomed Nersa’s decision, adding it was a reasonable remedy. “It is a victory for ourselves. Given the situation it was the only reasonable remedy,” he said.
He said Nersa decided to go with what AfriForum initially proposed to it, to grant tariffs implementation only by a percentage.
The group had been at loggerheads with the City in the wake of the City’s intention to forge ahead with the electricity hikes despite the approval by Nersa.
AfriForum approached the court in a bid to reverse the City’s decision to increase electricity tariffs.
In court, both parties proposed to engage in talks with each other and suspend the legal route.