City’s mayoral committee member for finance, Ian Neilson said the increase was as a result of Eskom’s 17.8% increase to municipalities. Picture: Danie van der Lith
City’s mayoral committee member for finance, Ian Neilson said the increase was as a result of Eskom’s 17.8% increase to municipalities. Picture: Danie van der Lith

Outcry over City of Cape Town’s steep electricity tariff increase

By Mthuthuzeli Ntseku Time of article published Jul 5, 2021

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Cape Town - Residents of Cape Town, struggling with job losses and salary cuts because of lockdowns brought on by the Covid-19 pandemic, were dealt another gut punch with the City’s electricity tariff increase of 13.5% which took effect last week.

Resident and ratepayer organisation said this will have devastating effects on households and businesses.

City’s mayoral committee member for finance, Ian Neilson said the increase was as a result of Eskom’s 17.8% increase to municipalities.

He said the City's tariff increases were the lowest of all metros in South Africa and the biggest increase was from Eskom.

One Cape Argus reader shared that for prepaid electricity they would pay R150 and get 53 units prior to the new tariffs, and after 1 July purchasing the same amount of electricity would only give them 46.60 units.

Sandra Dickson, from STOP COCT, said the latest report by credit ratings agency Moody's clearly stated that the City consistently reported robust operating surpluses.

She said in spite of the City sitting with R18 billion in cash reserves, residents had been begging for relief on their municipality bills.

“The City’s Eskom bulk purchases make only 65% and the other 35% are salaries and the City’s own expenses on operating its electricity grid. The 35% portion of expenses could not have increased by 13.5% too, unless there is gross mismanagement somewhere.

“The City therefore built another avenue to bolster its surplus and cash reserves for 2021. Many comments by the public received by the City during the budget’s call for comment were plainly ignored,” said Dickson.

Bo-Kaap Civic and Ratepayers Association chairperson Osman Shabodien said the revenue that the City derived from electricity was a major source of income.

“We feel that the City should not make a profit selling electricity and still charge a service fee. The City’s basic free electricity only applies for homes below R450 000 income which excludes lots of homes that previously got some basic electricity free,” he said.

Goodwood Ratepayers and Residents Association chairman Faizel Petersen said poor management by Eskom for years led to critical maintenance not being done on power generation units.

“The Tegeta Explorations contracts with the Gupta’s, which cost us about R600 million and overall corruption has led to rolling blackouts through load shedding in our country.

“It is therefore unacceptable that citizens of this country are expected to finance these incompetence and corruption, and then have to fork out more money, during a very difficult economic period of our country and the globe,” said Petersen.

Petersen said residents understood that the City was compelled to raise its tariffs in line with NERSA approvals, but the City had a finance reserve of more or less than R18 billion that could help cushion these high increases.

Table View Ratepayers Association chairperson Mandy Da Matta said municipalities were warned by financial gurus not to increase rates and taxes.

Da Matta said the more tariffs and rates increased the less affordable property becomes.

“At the end of the day you are devaluing property in your municipality area because less people are able to afford these high tariffs. South Africa has lost 500 000 jobs in the last 12 months and many businesses closed due to Covid-19 now who can afford an increase in tariffs.

“We have been begging the Council to stop increasing the tariffs as it equates to sucking blood from a stone. People in other areas are already ’stealing’ electricity and water because it's a basic right while others have resorted to using paraffin and making open fires,” she said.

Nielsen said the City had absorbed more of the massive Eskom-driven electricity increase to protect the customers than any other metro in an effort to protect customers as much as possible.

He said any property owner who has lost their income was able to apply for indigent status and receive the indigent benefits, including zero rates and reduced or free services.

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Cape Argus

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