THE City of Cape Town says that 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 metro said. 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 said.
“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,” the City of Cape Town said.
“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,” it stressed.
The City of Cape Town rejected reports that it has 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 metro stated.
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, it noted further.
“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 said it does not have the most expensive tariffs when one includes the fixed charge part of the tariff.
“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.”
Credit control
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.
The City of Cape Town said that 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.
- Business Tech