The City of Cape Town would like to correct some of the misinformation about its electricity tariffs that are being driven by some groups.
• Customers are seeing the impact of the massive Eskom-driven electricity increases.
• It now costs municipalities 17,8% more to buy power from Eskom. The majority of the City’s electricity tariff income is used to buy power from Eskom, and now at higher prices. The rest of the tariff income goes for the maintenance, investment and operations of the City’s network. This is where the City has some direct cost control and has managed to absorb as much of the cost of the steep Eskom increase as was possible without impacting on service delivery.
• It is impossible to absorb the full extent of such massive increases, although the City has done its best. The City was compelled to implement a 13,48% electricity increase from 1 July 2021 as was communicated in June. This is directly because of the Eskom increases.
• Still the City has absorbed more of the price hike than any other metro in South Africa – where the average increases are 14,59%.
• The income from tariffs is used to cover the cost of providing the service. If the City does not get the income from the tariffs, it cannot deliver the services.
• The tariffs reflects the cost of providing electricity – so it is the current cost of electricity provision and it is not cheap to generate and supply electricity as it stands.
• Assistance is available for struggling residents on a case-by-case basis. But the City cannot afford to provide free electricity or to offer blanket relief to everyone regardless of the circumstances of customers.
• The City of Cape Town does not have the most expensive tariffs in the country. Far from it. Although it is not an easy comparison to make as there are different tariff bands and customer bases for all these metros, if you are supplied by the City of Cape Town, including the fixed component of the tariff, you still generally receive more units than in Joburg, especially when you use less electricity. For example, for the City of Joburg, the equivalent fixed charges per month is R768,21 (incl. VAT). This does result in lower per kWh charges, so which metro is cheaper depends completely on the amount of energy consumed – again, electricity is cheaper for consumers in Cape Town who use less electricity. The City thus always actively encourages customers to use less and pay less (see the myth busters below).
• The fixed charge is an established part of tariffs, not only in Cape Town but also in the rest of the country, as it ensures that income is stable, irrespective of how much or how little is used. This enables a service provider such as the City to provide reliable services. The City’s fixed charge as part of the electricity tariff was approved some years ago. It is not new.
• The City of Cape Town does not have the most expensive tariffs when one includes the fixed charge part of the tariff. Far from it. Although it is not a straightforward comparison to make as there are different tariff bands and customers bases for all these metros, if you are supplied by the City of Cape Town including the fixed component of the tariff, you still generally receive more units than in Joburg especially when you use less. For example, for the City of Joburg, the equivalent fixed charges per month is R768,21 (incl. VAT). This does result in lower per kWh charges, so which metro is cheaper depends completely on the amount of energy consumed – again lower consumers will pay less in Cape Town. The City thus always actively encourages customers to use less and pay less (see the myth busters below).
• The City’s electricity tariffs are legal. There is no unlawful addition to the tariff schedule for the 2021 Financial Year. Those claiming this are spreading misinformation about the tariffs.
• The ‘unregulated’ tariffs have always formed part of the overall tariff paid by customers, but were separated out of the tariff a few years ago as a result of a Nersa decision that these do not form part of their mandate to approve. NOTE: These tariffs are still required to be approved by Council in terms of the Municipal Finance Management Act and are subject to any norms and standards as imposed by the Minister of Finance in terms of the Municipal Fiscal Powers and Functions Act. City tariffs are thus approved in terms of the relevant processes and legislation of South Africa. To claim otherwise, is spreading misinformation.
Help and deductions for arrears
The City understands the plight of many customers who have been severely affected by the Covid-19 pandemic and lockdown and has availed assistance on a case-by-case basis. Separate indigent and pensioner rates relief is also available.
In terms of the City’s Credit Control and Debt Collection Policy, deductions for municipal arrears debt via electricity purchases, may be made if after warnings and notification to the debtor no action has been taken by the debtor to approach the City for assistance and to agree to a valid payment arrangement.
Instead of disconnecting the electricity supply (as happens with a non-prepaid electricity meter), deductions (when purchasing electricity) only happens if:
• There is no payment arrangement in place despite warnings and notifications.
• There is a payment arrangement in place, but it is not valid as it is not being adhered to by paying in full the monthly agreed-to payments and keeping to the agreement.
• Ad hoc payments are being made but there is no formal arrangement with the City.
• If an account possibly has a tampering charge on it from a previous investigated tampering incident, that would be deducted via the electricity purchase, where relevant.
About 40% of people in Cape Town get support with rates and services, and City rentals.
Customers will notice the following in their July and August bills:
• Minimum required average rates and tariff adjustments.
• Electricity price adjustment due to the large Eskom-driven increase of 17,8% to municipalities, affecting customers.
• Winter equals higher electricity usage due to space and additional geyser heating which leads to higher bills.
• Covid-19 household impact: more people in the home, generally for longer periods of time, leading to higher electricity usage, and thus higher bills.
Common myths busted and how buying units in the right way can reduce costs:
Source: City Of Cape Town
