Joburg coming after ‘rich’ customers with R2,400 prepaid tax

The City of Johannesburg’s power utility City Power says that its controversial R200 service charge introduced in 2024 is meant for ‘affluent’ families who have moved to prepaid electricity users to dodge R1,000 in services fees.

Speaking at an engagement with the Johannesburg Chamber of Commerce on Thursday (13 February), City Power chief executive Tshifularo Mashava said that the utility was acutely aware of the negative reaction to the charge but insisted it had a purpose.

She said that the utility was listening to concerns that the fixed R200 fee for prepaid users was seen as too expensive, and it was activitely looking at ways to exempt certain customers from paying it.

This would not be customers in “affluent areas”, however, as this is who the charge is directed at.

“The R200 was implemented to ensure that residents in affluent areas, particularly those who have transitioned to prepaid meters, contribute to the maintenance and service costs, much like their postpaid counterparts,” Mashava said.

“However, we do recognise the need for sensitivity towards our customers in lower-income areas. As part of our ongoing efforts, City Power is exploring avenues to exclude these customers from paying the R200 charge.”

The City Power CEO said that “lots of customers” in affluent areas have moved from post-paid metering to prepaid metering specifically to avoid having to pay for maintenance charges, which are currently sitting at around R1,000.

This changed the dynamics of revenue generation for the utility, forcing it to find other ways of ensuring that these “well-off” customers still contributed to essential charges and maintenance.

“We are continuously reviewing our tariff methods and structures to ensure that the poor are cushioned from excessive increase.

She said the utility is currently awaiting deliberations from energy regulator NERSA regarding 2025’s tariff increase.

R2,400 tax

The R200 per month surcharge for prepaid users was implemented by the City of Joburg in July 2024 along with the annual increases in municipal tariffs.

The city council had attempted to pass a similar charge in previous years, but always withdrew it after widespread backlash.

The charge, which is actually R230 after VAT, was initially proposed at a much higher level, with the city initially budgeting a R550 fee.

Council justified the implementation of the charge as a way to align prepaid user prices with conventional electricity user bill.

It argued that even though prepaid electricity users only consume electricity on demand, the network still has to ensure that the distribution network has that electricity available.

At the time, the city said it planned to increase these charges further in the coming years.

Following widespread public and political backlash, however, then Member of the Mayoral Cabinet (MMC) for Finance, Dada Morero, said the charge would be reviewed.

Morero has since been elected as Joburg’s mayor.

At the time, he said that the council would review the charge, but it is now evident that any review is unlikely to soften the blow for what City Power sees as “well-off” or “affluent” customers.

These customers have also been in the city’s crosshairs during its clampdowns on bypassed prepaid meters, where premises found to have been tampering with their meters are shifted onto post-paid plans.

The city has also been clear that, even if the prepaid tax is reviews and changed, the surcharge is not going anywhere.

Mirroring the sentiments expressed by Mashava this week, Morero’s plans in 2024 were to expand the register and list of households that are on the Expanded Social Package (ESP).

These are households that they are exempt from the charge.