Proposed electricity tariff hike will cripple Msunduzi

2015-03-24 00:00

WITH the devastating proposal of a 22,27% electricity tariff increase hanging in the balance, experts say the hike could cripple Msunduzi Municipality and municipalities nationwide.

Eskom confirmed a price increase of 12,69% for direct customers for April 1 and a 14,25% increase for ­municipalities from July 1.

However, Eskom has applied for an additional 9,58% adjustment to the tariffs, which would bring the increase up to a hefty 22,27 %.

The previous increases were ­approved by the National Energy ­Regulator of South Africa (Nersa) during November 2014.

With Msunduzi using revenue ­generated from electricity tariffs to provide other services for the city, the sky-high increase would have negative effects on the smooth running of the city.

Municipal spokesperson Madeleine Jackson said yesterday the increase would only serve to put the municipality in debt.

“Electricity revenue is used to subsidise other services. Approximately 80% of revenue comes from services of which 60% is electricity.

“The tariff increases being sought from Eskom will have a negative ­impact on the municipality’s ever increasing debtors book as 60% of overall debt is contributed by residential customers that are struggling to settle their debt in full monthly.

“Most of our consumers are living just above the poverty line, which will mean our debt will increase even more,” she said.

Jackson said it was too early to comment on any steps the municipality might make in objecting to the increase and said any engagement around the tariffs would be done through Nersa.

Pietermaritzburg Agency for Community Social Action (Pacsa) advocacy and research officer Julie Smith said Msunduzi Municipality would be in a major crisis should the 22,27% increase be approved by Nersa.

“Revenue from electricity tariffs contributes towards services in the city however, with an increase as high as 22,27 % the municipality would not be able to make a profit and would actually be out of pocket.

“Although it will have an effect on municipalities nationwide, it’s the smaller municipalities that are really going to struggle,” she said.

Smith said Msunduzi should start looking at restructuring their tariffs so that those who can afford to pay the increase will and those who cannot will pay less.

“It would minimise the pressure in the reduction of revenue.

“Municipalities should also put pressure on Nersa to bring down the increase and say they cannot afford it.”

When asked what steps Msunduzi would take to remedy the staggering increase should it be implemented, Jackson said the municipality did “not want to pre-empt the decision that will be made”.

“Depending on the outcome of the application that has been made by ­Eskom, the necessary engagements will take place between Nersa and the municipality,” said Jackson.

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