Municipalities ripping electricity users off: report

Municipalities are ripping electricity users off – especially businesses – claims a businessman, who compiled a comparison of electricity usage costs across several districts in South Africa.

The comparison, published in the City Press, shows that a business buying electricity from the City of Johannesburg will end up paying R1.71 per kilowatt hour (kWh), while buying power from neighbouring Ekurhuleni would be far cheaper at R1.43 per kWh.

However, if a business were to buy from Eskom directly, they would only pay R1.16 per kWh.

The cheapest municipality was Nelson Mandela Bay at R1.03 per kWh. City of Cape Town charges R1.39 per kWh (or R1.17 with the investment incentive) and Durban charges R1.26 per kWh.

The businessman said that, given the broad differences between tariff prices across municipalities, it was evident that they are ripping consumers off, and ignoring guidelines put in place by the National Energy Regulator of South Africa (Nersa) to determine these prices.

Economist Mike Schussler noted that over the last decade, electricity prices have grown at double the rate of inflation, while Afriforum has called for Nersa to better regulate the environment and ensure price hikes are motivated.

Eskom recently submitted a R5.4 billion supplementary tariff increase application to Nersa, seeking to recoup lost revenue. This is over and above the R27 billion it had already applied for previously.

Together, these applications could see tariffs increase by as much as 15%.

Previously, Nersa had truncated Eskom’s application for higher tariffs, saying that government’s R69 billion bailout of the company over the next three years should factor into the equation.

However, Eskom challenged this in court, and won. Nersa has now been forced to correct the amount the power utility is allowed to recover.

Read: South Africa to tender 12,000 MW of new independent electricity sources – including wind, solar and gas

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Municipalities ripping electricity users off: report