Electricity pain ahead

2010-05-20 00:00

THE Msunduzi Municipality revealed that it plans to increase electricity tariffs in the financial year starting on July 1 by an estimated 25%.

Msunduzi intervention team member Piet Dorfling told an Exco meeting last night the team is looking at phasing out the 50kW per hour of free electricity received by indigent residents and making this amount available to all Msunduzi residents.

Eskom will raise its tariff by 28,9% from July 1. Dorf­ling said the National Energy Regulator (Nersa) has issued guidelines to councils with a suggested increase of 21%.

But Dorfling warned: “A 25% increase is likely, not 21%. These tariffs go hand in hand with the budget process.”

The report said Msunduzi’s tariff structures were analysed and changes proposed, including:

• a lifeline tariff with a single energy rate is proposed with a 20Amp capacity limitation for pre-payment meters

• basic charges will be introduced for all other tariffs

• the block rate tariff will be discontinued

• a time of use tariff will be introduced

• simplified, cost-reflective tariffs for public street lighting services will be introduced.

Msunduzi administrator Johann Mettler said there is a slight risk of revenue loss when customers convert to the lifeline tariff from the conventional metered tariff, but this should be very small.

“A separate proposal has been done to phase out various tariff discounts … The revenue implications of these measures are excluded from the proposal,” said Mettler.

The proposed tariff changes must be published for comment in the city’s newspapers in order to comply with regulations.

Exco was also told that the municipality’s cash flow is on the increase. The funds in the municipality’s various bank accounts, excluding the main bank account, totalled R159,03 million as of Tuesday. The funds relate to unspent conditional grants, which have been reconciled and are maintained in various bank accounts, Exco was informed.

An amount of R30,48 million was received in the form of a municipal infrastructural grant on May 14 and the amount was transferred to a bank account that holds such grants. The municipality’s main bank account had a balance of R23,31 million as of Tuesday, after the council made a payment of R42,7 million to Eskom.

Mettler’s report on the council’s cash flow warned: “It should be noted that expenditure should be contained and should be incurred only in areas that are critical and those relating to service delivery. This is due to the projected cash deficit of R16 million at May 31 and R108,50 million at June 30.”

With just over a month to go until the end of the current financial year, Exco approved an adjustment budget after records showed that the operating budget has been overspent by R523,62 million.

The adjustment budget will be reduced from R327,34 million to R263 million.

Some of the major contributors to the overspending are massive overtime claims, the drop in the municipality’s collection rate, additional amounts in interest-related costs and high electricity and water bills.

Dorfling said the municipality practically received “a double account from Eskom because this was not managed properly”.

“Eskom still need to explain why they are charging us so much.”

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