Cape Town calls on Nersa to reject Eskom’s 44% tariff hike
21 August 2024
Cape Town Mayor Geordin Hill-Lewis has written to the National Energy Regulator (Nersa) calling for the rejection of Eskom’s planned 44% tariff hike. Eskom has yet to formally submit its application, but early consultations have revealed their intention to ask Nersa for a 44% hike for electricity sales to municipalities, and a 36% hike for direct Eskom customers.
In a letter to Nersa on 20 August, Mayor Hill-Lewis informed the regulator of the City's strong opposition to Eskom's 44% hike.
'This is a mammoth Eskom increase that Nersa must stop in its tracks. It is unthinkable. On behalf of Cape Town households and businesses, especially small businesses, we are calling for the rejection of a 44% electricity tariff hike. The economic impact, and also the impact on especially lower income families, will be immense with the cost of living already so high,' said Mayor Hill-Lewis.
In the letter, the Mayor further cites the City's concern that Eskom's proposed increase will force consumers to pay for the parastatal's poor operational choices, including the legacy of mismanagement and corruption.
'We are calling on Nersa to marshal the independent expertise needed to assess Eskom's cost structures and margins. We believe that Eskom can improve their efficiency, reduce costs, and develop new revenue streams rather than passing this huge increase on to consumers,' said Mayor Hill-Lewis.
Cape Town is the city with South Africa's most advanced plans to buy more affordable power on the open market to lessen Eskom reliance and exposure to double-digit annual increases. The City is investing R4bn in electricity grid upgrades over the next three years in preparation for a decentralised, dynamic energy future with multiple power sources and thousands of small-scale generators.
'Cape Town is one of a handful of municipalities that bases our own tariff asks to Nersa on detailed cost-of-supply studies, and we are glad to see the courts affirming this method as correct and lawful. We know the fine detail of what it costs to operate a future-focused, well-run electricity service. Buying power from Eskom accounts for 70% of our costs, and there is no way we can absorb a massive 44% increase while still hoping to offer a working electricity service to Capetonians. We also know that households, businesses, and our economy can't afford 44%, so the best approach is to stop this Eskom madness before it becomes reality,' said Mayor Hill-Lewis.
To shield lower income households from Eskom increases in recent years, Cape Town has been offering SA's widest qualifying criteria for Lifeline electricity, including:
- Property value qualifying threshold: R500 000
- Monthly household income threshold: R7 500 (if property value >R500k)
- Pensioner and grant recipient criteria: <R22 500 monthly income, regardless of property value
Cape Town is also the only metro to reduce the cost of lifeline electricity in the last two years. In 24/25, Lifeline customers using 600 units in a month, will pay R113,94 less compared to two years ago in 2022/23 in line with the City's pro-poor lifeline tariff restructuring.
According to StatsSA's Non-Financial Census data for municipalities, released in March 2024, Cape Town has SA's highest proportion of residents benefitting from free basic water and electricity. The City is 10 percentage points ahead of the next metro for free electricity reach, and 25 percentage points ahead for free water and sanitation.
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Published by:
City of Cape Town, Media Office
