Cape Town to get lower electricity price hike this year
The national energy regulator Nersa has approved a 18.49% tariff hike for municipalities in South Africa – but the City of Cape Town says it will contain the price hike to 17.6% for residents.
Cape Town mayor Geordin Hill-Lewis made the announcement while tabling the 2023/24 budget for the city.
The mayor said that the city was shielding residents from the full blow of the Eskom-driven price hikes and would offer more protection to lower-income customers on the city’s subsidised “Lifeline” tariff.
This would be in tandem with the city’s plans to fund its move away from solely relying on Eskom, and doing what it can to bring an end to load shedding in the municipality.
“We fought against Eskom’s increase at every step of the way because it cannot be the job of the City, or its residents, to keep on subsidising Eskom’s increases. I know how much people are struggling to make ends meet right now, and that Eskom’s spiralling electricity prices wreak havoc on household budgets,” he said.
Regarding the subsidised Lifeline electricity tariff: where customers consuming more than 350 units currently pay R3.71, shifts in the budget will reduce this tariff to R1.84.
The mayor also announced that the city is raising the property value criteria for Lifeline customers to R500,000 – up from R400,000 – to compensate for residents’ property value growth.
The broader plan to end load shedding will see the city spend R2.3 billion on mitigation efforts.
This includes:
- R220 million to buy power on the open market;
- R288 million for the Power Heroes voluntary energy savings incentive scheme;
- R1 billion to operate Steenbras hydro-electric plant;
- R53 million in ‘cash for power’ payments for solar power from residents and business;
- R640 million on city-owned solar plants; and
- R50 million in battery storage technology.
Hill-Lewis said Cape Town was aiming to protect residents from the first four stages of Eskom’s load-shedding within three years.
“We are confident that Cape Town will be the first metro to break free from the suffocating hold that Eskom has placed on our country, and in doing so we will show that there is a bright electric light at the end of this Eskom tunnel,” he said.
Electricity prices climbing higher
In January 2023, Nersa approved an 18.65% increase in electricity prices for 2023 – and a 12.74% hike for next year.
The 18.65% price hike will apply to Eskom direct customers (which includes municipalities) and will take effect from 1 April 2023.
Earlier this month, Nersa confirmed the hike and also approved an 18.49% hike for customers of municipal electricity services, which is set to come into effect from 1 Jult 2023.
The price hikes will add pressure to household budgets, which have already been hard-hit by high levels of inflation and rising interest rates – all while the availability of electricity has been at its worst in the country.
Continuous load shedding and rising prices are a significant push factor for many middle-class and affluent households to go off-grid to escape Eskom, with the country seeing a big push into solar and other mitigation measures.
While the move away from Eskom has been welcomed and even encouraged by the government through its rooftop solar tax incentive, local governments and municipalities have been less enthused.
The South African Local Government Association (Salga) has warned that municipalities derive a significant portion of their revenue from electricity sales – and these revenues are at risk with the wider adoption of alternative power sources.
This could also lead to a situation where more affluent households are able to escape the grid, leaving poorer and more vulnerable households having to pay even more for electricity to make up the balance.
Eskom has long argued for higher electricity tariffs, saying that the current fees do not reflect the cost of producing electricity. The embattled power utility applied for a fee hike of over 32%.
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