The electricity tariffs were approved by the City’s Council as part of the 2019/20 Budget after a public participation process which was held during April 2019. NERSA also approved the City’s 2019/20 tariffs.

In accordance with the Constitution of South Africa and local government legislation, namely the Municipal Systems Act and the Municipal Finance Management Act, a municipality may raise a surcharge on municipal services. Such a surcharge would be used to fund other services and would not be used to recover the costs of providing electricity.

City’s fixed charge not a surcharge, it is for cost recovery
As discussed during the engagement, the City’s fixed electricity charge is not a surcharge and it was not introduced to generate extra income.

‘The City’s fixed electricity charge is used to recover the costs of providing electricity. It is not for profit or extra income for other services and it is thus regulated by NERSA. The 2019/20 fixed charge of R163,32  (including VAT) was approved by NERSA. 

‘In terms of the Electricity Regulation Act, NERSA regulates the costs of providing electricity. NERSA’s mandate does not extend to regulating a surcharge under the municipal legislation. It is highly likely that the complaints which were made to NERSA comes in light of other South African cities attempting to introduce a fixed electricity charge as a surcharge to raise additional revenue. This is what has prompted complaints about the City’s fixed charge as some consumers wrongly believed it to be such a surcharge. To reiterate, the City’s fixed charge is not a surcharge. It is for recovering the cost of providing electricity and no profit is made,’ said the City’s Director for Electricity Generation and Distribution, Dr Les Rencontré.

The new City tariffs came into effect on 1 July 2019, which is the start of the new municipal financial year.

‘No profit is made from the City’s electricity income. Some 65% of the electricity tariff goes toward buying bulk electricity from Eskom. Eskom’s tariff increased by 15,6% compared to the City’s increase of 8,88%.

‘The City compares well to other metros, with costs being lower in many instances.

‘We have made considerable provision for vulnerable households and the elderly through the provision of rates rebates and indigent relief for thousands of residents. We continue to do our utmost as a City to cut costs and to keep affordability front of mind when tariffs are proposed.

‘We are also pleased to have had the opportunity to engage NERSA and some of the complainants and we sincerely hope that parties now understand the nature of the City’s fixed charge as one of cost recovery and not as that of a surcharge. We hope that constructive engagements can happen again in future when the next budget and tariff cycle commences,’ said the City’s Mayoral Committee Member for Energy and Climate Change, Councillor Phindile Maxiti.

End