Another electricity shock: prices in cities will soar

2014-05-18 15:00

South Africa’s metro councils appear to be cocking a snook at energy regulator Nersa, pushing up electricity tariff prices far beyond what’s allowed.

The reason? We’re being more careful about how much power we use, and so their profits from electricity are falling.

Now if they have their way and Nersa pushes the request through, businesses in the metros will pay between 8% and 82% more for power from July 1 – and households will feel the crunch, too. In Cape Town, Joburg, Ekurhuleni, Tshwane and eThekwini, household consumers are set to pay between 7% and 9% more for power.

Only Nersa can now halt these increases, which are much higher than its guidelines which state that municipalities may increase their electricity tariffs by a maximum of 7.39%.

The metro councils’ draft budgets, which City Press’ sister paper Rapport has seen, explain that their profits from electricity for the past three years fell by between 1% and 2% because of a decrease in electricity consumption and that business and domestic users’ tariffs should have been structured to subsidise the growing number of poor people.

These municipalities predict that the situation will only improve in 2018 if electricity consumption increases.

The Ekurhuleni metro council is nowplanning an astronomical increase of 82% for businesses that use more than 700?kilowatt hours of power per month.

In Cape Town, business tariffs are rising by up to 18%, in Tshwane 16% and in Joburg 10%, depending on electricity consumption.

While Nersa’s guidelines stipulate that municipalities’ business tariffs should not be higher than 120% of Eskom’s, businesses in Cape Town will pay 180% more from July 1 for electricity provided by the city council than businesses that buy their power directly from Eskom.

In Mangaung (Bloemfontein), the tariff is about 178% higher than Eskom’s tariff. Joburg is 170%, Emfuleni is 165% and Ekurhuleni 150% higher.

“These increases are obscene and well above inflation,” said Mike Schüssler, an economist for economist.co.za. “Consumers already cannot pay for municipal services because electricity tariffs have increased by 166% since 2008. This has already caused widespread job losses and an exodus from business,” he said.

Mike Rossouw, chairperson of the Energy Intensive Users Group, a coalition of big industrialists, said no business can absorb such steep increases year after year.

Nersa spokesperson Charles Hlebela said the regulator was currently analysing the municipalities’ proposed tariff increases.

“Each city council’s application is considered on its individual merits,” he said.

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