The City of Cape Town has come under fire following reports that its electricity tariffs were now much higher than other metros, and that it would no longer offer a subsidy to its most vulnerable citizens.
A number of residents have claimed that the skyrocketing value of property in Cape Town has directly led to an unaffordable tariff increase for many.
However, in a statement released by the City of Cape Town, mayoral committee member for finance Johan van Der Merwe said these assertions were false.
“The great majority of tariff increases for City services are close to, or within the inflation range,” said van Der Merwe.
“Our energy tariffs at heart remain consumption-based, so the less you use, the less you pay.”
He did acknowledge that large increases in Eskom bulk electricity over the last number of years meant that electricity was no longer cheap.
This was compounded by the fact that the City has for a number of years used property value as one of the criterion to automatically allow residents to access subsidised services.
“With the change of consumption patterns, high-value properties with more affluent consumers, but low consuming households, are increasing in number,” said van Der Merwe.
“With the current consumption-based-only tariffs, they are not contributing an equitable share to the subsidisation of the most vulnerable households.”
“Accessing below-cost tariffs aimed at the most vulnerable is not sustainable or equitable,” he said.
He emphasised that limiting consumption will keep customers in a lower bracket of the Domestic Tariff.
Van der Merwe further blamed government for standing in the way of Cape Town procuring renewable energy directly from independent power producers (IPPs)
“The City will therefore be taking the Minister of Energy and the National Energy Regulator of South Africa (Nersa) to court,” he said.
As part of its release, the City of Cape Town provided a comparison of electricity pricing as it typically pertains to middle-income areas.
While those in Johannesburg can expect to pay more when using between 500 kWh-1,000 kWh, there is a steep increase for Capetonians who are heavier electricity users (1,000 kWh+) when compared to Johannesburg.
According to the City of Cape Town, this is because of the subsidy that lower-income consumers benefit from, and the varied customer mix between the two metros.
|City||Price for 500 kWh (incl. VAT)||Price for 1,000 kWh (incl. VAT)|
|Johannesburg||R1 146.09||R1 881.27|
|Cape Town||R964.00||R2 094.56|
Why Cape Town pays more
The City of Cape Town further published a list of the five biggest reasons as to why there is such a price disparity between the two metros:
Johannesburg City Power has a lot more ‘big industries’, so they can subsidise residential customers to a larger extent without the kind of impact on non-residential customers that the City of Cape Town would face.
- The City also starts with an approximate 3% disadvantage compared to Johannesburg because we are further away from Eskom’s Megawatt Park. Eskom bulk prices (i.e. Megaflex etc.) include different transmission zones. The further one is situated from Megawatt Park, the more one pays.
Nersa has approved City tariffs at about 15 c/kWh less than what they approved in 2016/17. This is due to questions with regard to Nersa’s authority under the Electricity Regulation Act to approve surcharges on the tariff versus the City’s authority under the Municipal System’s Act. Nersa had included the 15 c/kWh in their draft approval. Nersa has not applied this approach to all metros at this point and it is hoped that this is applied consistently next year for all metros.
The wrong Johannesburg City Power tariff is being looked at. It must be borne in mind that Johannesburg City Power does not install prepaid meters in middle-oncome areas (customers may, however, apply to have these installed).
The City of Johannesburg has admitted that the Domestic Prepaid Tariff is subsidised and does not contribute its fair share of the costs, and may in future also be required to pay a monthly service fee.
The City of Cape Town said it will continue to do all that it can to keep increases across the board as low as possible, to ensure a reliable service and that those who require assistance, are supported in the most sustainable manner for the city as a whole.