Tariffs: be an active voice

2014-01-21 00:00

IT is heartening to see people stand up for their rights, but it is important to note that objecting verbally is often not enough to ensure results. Municipal legislation ensures that the public can participate in local decision-making, but processes need to be followed and submissions made.

The latest objections to the increase in the basic charges for electricity for commercial consumers is a case in point. I thought that it might be helpful to talk a little about the tariff process, so that ratepayers can become more active in the process of tariff negotiation.

At the beginning of the year, the municipality advertises its proposed tariffs for the following year (July to June). There is an opportunity for members of the public to object by a closing date and to attend a public meeting, should they wish to. All views are considered, and a draft budget is then drawn up by the municipality. There is (again) an opportunity for public engagement. Amendments may be made and the council then approves the budget. If the proposed electricity tariff is higher than the National Energy Regulator of South Africa’s (Nersa’s) recommended tariff for municipalities, then the municipality must apply for the increased tariff and have it approved by the regulator, before the budget can be approved. Once a submission is made to Nersa, the public can object to Nersa and/or attend the Nersa public meeting. Nersa then makes a decision, which can be appealed.

What happened in the case of Msunduzi this year, is that the municipality originally proposed an 18% increase in electricity. The Pietermaritzburg Chamber of Business (PCB) collected in excess of 3 000 objections and submitted these, along with those of individual objectors, to the municipal manager. We then attended the public meeting and made a presentation and submission. The city officials set the tariffs at 10% when the draft budget was drawn up. The PCB submitted a comprehensive response to the draft budget and objected to the 10% increase, but to no avail. We then submitted an objection to Nersa and requested a public meeting. We attended the public meeting in Pretoria and made a presentation on behalf of the business community of Pietermaritzburg. Msunduzi was awarded a seven-percent increase as opposed to the 10% that it applied for. The Nersa decision was appealed by the municipality. The PCB made a further submission, and Nersa upheld its decision to allow Msunduzi a seven-percent increase. In a letter to the city in June, Nersa indicated tariffs that should be applied by the municipality. Under “commercial tariffs,” two tariffs were indicated in that correspondence: a “basic charge” and an “energy charge”. The amount indicated as the “basic charge” was implemented by Msunduzi. It has always been our contention that the “basic charge” quoted in the correspondence included both the basic charge and the net ampere/MCB charge (which is not indicated separately). We believe that the Nersa correspondence was misinterpreted and, having already increased the MCB by seven percent, the municipality then put the basic charge up to the increased combined cost. This, we believe, is what resulted in the exorbitant increases currently faced by business.

It is (and has always been) difficult to believe that Nersa intended for the municipality to put the basic charge up so high, especially in view of the fact that it kept the overall increase to seven percent. The PCB sought clarity from Nersa, and recent correspondence from the regulator seems to confirm our contention. Understandably, the city manager wishes to engage further with Nersa in order to confirm final tariffs before a decision is made on a way forward. I feel confident that this issue will be resolved shortly.

I appeal to members of the public to become active participants of lobbying entities in the city. The chamber is the voice of business in this region and we are proud to be the fourth-largest chamber in South Africa. We are grateful for the support of our membership and recognise that our submissions carry weight in direct proportion to our representation. If you are in business and feel strongly about advocacy, then please consider adding your voice — it might make a world of difference.

• Melanie Veness is the CEO of the Pietermaritzburg Chamber of Business.

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