R200 prepaid electricity tax changes coming – with a big catch

 ·10 Jul 2024

Member of the Mayoral Cabinet (MMC) for Finance in the City of Joburg, Dada Morero, says that a review of the newly-introduced R200 per month prepaid electricity surcharge will

During an extraordinary sitting of council on Tuesday (9 July), Morero said that the executive had committed to reviewing the surcharge following outrage from communities and electricity users when it came into effect at the start of the month.

Speaking to Newzroom Afrika, he has now clarified that the review is unlikely to remove the charge entirely but rather find a way for the city to meet residents “halfway”.

“The review will be done within the approvals that we already have from (energy regulator) Nersa, and we will look at the process of the Municipal Finance Management Act, which suggests that once you have passed the budget, you can only pass it once,” he said.

This means that the executive will have to look at “a number of factors”, including “the affordability for the city and what level we can carry this thing”.

Morero added that the city will also be looking at the register and list of households that are on the Expanded Social Package (ESP), noting that they are exempt from the charge.

One of the biggest criticisms levelled at the R200 surcharge is that it harms poor households because the city’s register of ESP households doesn’t match up with other data, leaving thousands of indigent residents in the lurch.

Ultimately, however, he said the review will examine how the city can accommodate residents’ needs in dealing with the charge, meeting those who say the charge is too expensive “halfway”.

The rub for residents is that the surcharge will not be going away – it may just be lower than R200.

There will definitely still be a surcharge,” he said.

In terms of timelines, the MMC said reports will be taken back to the executive, allowing utility City Power to conduct some studies and research.

This will then proceed to the finance department and move on to engagements with Nersa and the National Treasury.

“The budget can only be amended once a year – which means by January 2025, if there is a decision to reduce the amounts, it can only be effected then, after the budget adjustments,” he said.

Joburg MMC for finance, Dada Morero

Morero said that it took the city longer than other metros to implement the charge—first putting it forward in 2018, suspending its implementations during the Covid-19 pandemic, and then further delaying it on the basis of not doing sufficient public consultations.

A similar charge has already been in effect in other major cities in South Africa for some time.

He stressed that the charge was part of the city’s cost of supply modelling, which was submitted and approved by Nersa.

Explaining the reason for the implementation of the charge, the MMC said that residents are increasingly moving towards prepaid metering, which comes with a revenue loss that the city needs to maintain infrastructure.

He noted that conventional users of electricity (post-paid) have always paid service and network fees as part of the bills, but prepaid users do not.

Before implementing the surcharge, the city said that even though prepaid users only use power as they need it, the city still has to make sure that the electricity is available when residents buy units, which carries a cost to the network. This is the cost it is trying to recover.

“It’s not just about the R200 itself, but it’s also about the infrastructure that transports that electricity,” Morero said.

“We can’t stop customers from moving from conventional metering to prepaid – however, we have to introduce the availability charge so we can at least secure the resources for us to maintain the infrastructure.”

Read: Good news for R2,800 prepaid electricity ‘tax’

Show comments
Subscribe to our daily newsletter