THE electricity price hike proposed by the City is double that of inflation and will hit consumers, especially the poor hard warns a local civic organisation.
The National Energy Regulator of South (Nersa) has opened public hearings, including written comments, until Friday on the proposed electricity tariff following requests from various parties.
The regulator has proposed an average increase of 7.47% in municipal electricity tariffs from July 1.
However, some municipalities, including the City of Cape Town, have proposed increases of over 9.5%.
Spokesperson for Nersa Charles Hlebela said the public hearings would be in addition to the request for written comments that should be submitted within the next five days.
Eskom implemented an increase of 8.61% on bulk purchases by municipalities and increased the rest such as repairs and maintenance, finance costs at 4% – within the inflation rate.
The National Treasury, in a circular, also encouraged municipalities to maintain tariff increases at levels that reflected an “appropriate balance” between the affordability for poorer households and other customers while ensuring the fiscal sustainability of the municipality.
The CPI inflation level is forecast to be within the lower limit of the 3% to 6% target band. Therefore municipalities are required to justify all increases in excess of the projected inflation target for 2022/23 in their budget.
Civic Association STOP COCT slammed the proposed increase of 9.5% in the electricity tariff as “unacceptable’ as the City’s bulk purchases for electricity made up only 60% of their costs to resell electricity to residents.
Spokesperson for STOP COCT Sandra Dickson said it was ironic that the City proposed to increase its service tariffs almost twice the municipal workers’ salary increase of 4%.
Dickson said the 9.5% increase would hike the entire electricity price per unit.
“This blanket hike includes the bulk purchase, maintenance, salaries and other costs to resell the electricity it buys from Eskom,” she said.
Dickson said the tariff also escalated above inflation year after year and the effect was being felt by all households.
For example, an average household whose property was valued at R2 million, paid on average a municipal bill of R1 500 per month – another R1 500 on electricity on an average income of around R30 000 per month, added Dickson.
Currently, domestic customers paid R2.37 per KWh for up to 600 units.
For above 600 units, the cost per KWh was R2.89.
If the proposed electricity tariff hike would be implemented from July 1, consumers would pay 9.5% extra per unit.
The Greater Cape Town Civic Alliance said the City should not implement an increase that was above Nersa’s recommendation.
However, spokesperson Patrick Melly said a change needed to happen at Eskom to control the increases at municipal levels too.
“We have been paying for Eskom’s capital expenditure over these years and this has been reflected in the high electricity tariffs. But municipalities should keep increases under control,” said Melly.
He called for transparency on how the City determined the electricity structure.
“In these times of economic hardships, the City cannot proceed as if everything is normal. Many people have been struggling for years; even in the affluent areas they are looking at ways of coping financially,” said Melly.
He also said people were left with no other option but to buy electricity at a high cost because it was essential.
Activist and member of #ElectricityMustFall Natasha Selbourne also opposed the proposed tariff increase.
“People can no longer afford these increases – their salaries have not gone up in years and now they are slapped with tariff increases that are higher than the inflation rate,” she said.
Selbourne added that the City should find ways to absorb or derive revenue and provide affordable services to people.
“They know that these are basic services and we need them. The R350 social grant, now given to the jobless, cannot be stretched to pay for these services too.
“It’s the middle-class people who suffer the most,” said Selbourne.
Many residents were also upset with the deduction of money from electricity purchases to settle municipal rates arrears.
“It’s immoral and puts customers in a dire situation – electricity is a basic necessity and now they are being penalised. It might lead to consequences that the City may not have foreseen because some might resort to tampering with electricity boxes”, said Selbourne.
In the 2021/22 financial year, the electricity tariff increase was 13.48%, refuse removal, 3.5% and water and sanitation, 5%.
For 2022/23 the City also proposed to increase water and sanitation by 5% with an additional 1.5% for “expanding access” to informal settlements.
The City’s draft budget has been tabled for public input until May 3.
Mayco member for Finance Siseko Mbandezi said inputs could be provided via social media, telephone, WhatsApp and the City’s website.
Nersa was expected to submit comments by Friday to enable it to finalise the guideline and benchmark by May 11.
Thereafter, municipalities must submit their tariff applications and those that exceed the Nersa guideline will be submitted to a public hearing.
Hlebela said a schedule for these had not been finalised yet and could be held online.
Municipal determinations would be finalised before the implementation on July 1.