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Joburg’s prepaid electricity tariff shock

Effective rates for non-credit customers increase by up to 66%.

UPDATE: The City of Joburg has reversed the R200 per month municipal surcharge for prepaid electricity customers. Read more here.

A new fixed surcharge of R200 per month means that City of Joburg residents who use prepaid electricity will see actual increases of up to 66% in the cost of power from this month.

This surcharge will be added to municipal rates bills for July, meaning that residential users will not realise this massive effective increase in their day-to-day prepaid electricity usage. The surcharge does not apply to properties valued at under R350 000.

The City of Tshwane has also introduced a R200 fixed monthly charge from July for both “conventional” and “prepaid” users, “whether or not electricity is consumed”. However, this forms part of a High Court challenge last week by AfriForum (read: Tshwane tariff fight heads to court).

The Johannesburg’s City Power has also introduced new tiers in its tariff structure meaning that those users who consume more than 350 kilowatt hours (kWh) in a month will see a significant jump in pricing, without even taking into account the surcharge. Previously, consumption of up to 500kWh a month was at the same tariff.

2018/2019 blocks

c/kWh

2019/2020 blocks

c/kWh

Change

0-500kWh

124.49

0-350kWh

139.42

12%

351-500kWh

159.92

28.5%

500-100kWh

141.43

>500kWh

182.23

28.9%

Any consumption above 500kWh is also subject to a network surcharge of 6c/kWh. The above comparison also does not take into account the effect of the municipal surcharge. Because of the fixed nature of this charge, its impact is outsized on those households who use less electricity.

 

Rate (c/kWh)

Amount

Plus municipal surcharge

Including Vat

2018/2019 charge

Change

300kWh per month

0-350kWh

139.42

R418.26

R618.26

R711

R429.49

65.5%

 

 

 

 

 

 

 

500kWh per month

0-350kWh

139.42

R487.97

R927.85

R1 067.03

R715.82

49.1%

350-500kWh

159.92

R239.88

 

 

 

 

 

 

 

1 000kWh per month

0-350kWh

139.42

R487.97

R1 869

R2 149.35

R1 529.04

40.6%

350-500kWh

159.92

R239.88

>500kWh

182.23

R911.15

Network charge (>500kWh)

6

R30

A household using 300kWh a month will see an effective 66% increase in what they spend on electricity, more than five times higher than the 12% increase on the underlying tariff.

A major-metro trend

Johannesburg and Tshwane have become the second and third major metros to introduce a fixed monthly charge for prepaid customers. Last year, the City of Cape Town introduced a ‘home user tariff’ of R150 per month for prepaid customers whose houses were valued at over R1 million (credit customers paid the tariff regardless of the value of their property). From this month, the Cape Town tariff increases to R163.32.

City Power has not explained the reasons for introducing this tariff, but the City of Cape Town says in an explanatory document that “the service charge helps to maintain the infrastructure of our grid, including power lines, substations, transformers and electricity meters … Some 25% goes toward the maintenance of the grid, 65% to Eskom and 10% to the rates account.”

It adds that: “Due to the decline in usage, it is not possible to rely on electricity consumption to cover fixed costs as this will lead to unequal distribution of costs among the customer base.

Maintaining the ‘incentive’ to save electricity

“A hybrid tariff such as the home user tariff, which has a fixed cost but also looks at usage, will help cover the cost of energy purchases from Eskom so residents still have a financial incentive to save electricity. You will also be protected to some extent from future price shocks as a result of declining sales. Such shocks are a reality and we need to do everything that we can to mitigate against this. Due to the decline, we also need to create more certainty in the income that we get and a fixed cost is necessary to do this.”

Cape Town also points to the “model where fixed charges are recouped separately” already being “implemented by Eskom, Johannesburg City Power, and the City of Mangaung, among others”. It says the “municipality also previously had a service charge until 2011, when it was discontinued as a result of a regulatory requirement” and that in 2016, “Nersa [National Energy Regulator of South Africa] gave the go-ahead for the reimplementation of a fixed charge”.

Joburg’s financial pressures

Joburg City Power is clearly facing similar challenges. In a note to residents, Ward 117 councillor Tim Truluck points to the City Power 2019 Business Plan which states: “City Power has not been able to meet its revenue for a while. City Power used to have a cash coverage of three days and now it is an estimated -33 days. City Power has insufficient funds to meet its financial obligations in the short term.” He also cites a City Power document from March: “City Power will continue to assess ways in which the residential prepaid tariff can be better aligned to the residential conventional tariff.”

Already, City Power’s postpaid/conventional residential customers pay a service charge and a capacity charge each month. From July 1, this ranges between R631.17 and R805.41 per month (including Vat), depending on supply and phase usage. For a basic residential connection (single-phase 60 amp), the increase on the service and capacity charge is 13% from last year.

Rental property impact unclear

It is unclear how this separate charge will impact tenants using prepaid electricity in a rental property. Following last year’s implementation by the City of Cape Town, rental property law expert Marlon Shevelew made the point that: “Whether the landlord or tenant is responsible for payment of this additional charge depends on the wording of the lease.

“If the lease states that the tenant shall pay for all electricity consumed at the premises, then I would argue that the landlord must pay — however, it would be advisable in future to amend leases to cater for this charge by stating more specifically which party is responsible for paying the added amount.”

He adds: “Should it be unclear, and the lease states that the tenant is responsible for paying the electricity account, then I would argue that the tenant must pay the added charge. This added charge is set off, to some degree, by the reduced rate per unit.”

The prepaid surcharge for City Power business customers is R402 per month.

Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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Expropriation of assets without compensation has smartly begun.

By 3 DA local governments, nogal. Be careful what you wish for, DA voters. They’re even worse than the ANC.

I wonder how the smug DA voters are feelingas they get screwed over by their own party.

Wait till they start taxing your private PV installations and add a monthly pipe levy to your water bill.

Oh, and wait your new rates bill.

They might throw in a free plastic bag on refuse collection day though.

Well it is Africa and to be expected.

It has repercussions though. No more DSTV premium for me. Now taking the family package and surprised to see most of what I watch is covered anyway. The rest I stream off foreign channels. Soon maybe everything.

Nice saving of close to R 700-00.

Now to see what I can save on insurance and banks.

Another DA regular surprise, expect a lot more. They are turning Cape Town into the Monaco of SA.

An honest bill from the council would say…

Eskom corruption surcharge -400
Eskom incompetence surcharge-200
Eskom bloat surcharge – 300
Municipal corruption surcharge-250, etc

….you get the drift.

And so we enter the death spiral of the property market. A shrinking economy, jobless tenants, SARS coming for your rent – and soon the only thing left standing in the entire country will be our bloated parliment and a few bloated SOEs.

Bear in mind that these increases are on the back of more than 10 years of double digit raises every year – and a SARS target of a 15% increase, never mind the tanking economy. Taxpayers are going to be in for a round of harrassment not seen before.

The remedy is never to reign in corruption and incompetence.

Instead we continue to kill the goose until everyone is jobless and broke. This is the exact model of Zimbabwe with its 50% fuel hikes, local ownership rules etc. Might as well put the sign up – closed for business.

Forgot. The 4th industrial revolution is going to save us. As soon as we can produce learners who can read.

exactly. The much touted Black Diamonds will come to the rescue as well.

Cape Town City Council are issuing fines to homeless with no money. How’s that for practicality? LOL! Joke of the year!

I’m in Bedforview and I still cannot get the new electricity tariffs from my Ekurhuleni Overlords. Maybe they are just too embarrassed (Like hell they are) to tell us rate payers just what they have in mind to skim off more funds to top up the local dotgov’s Executive Mayor’s new car fund?
As I foresaw way back in the early 1960’s Uhuru should have come with a financial health and safety warning!
It’s great fun spending Other People’s Money but eventually you can only take that bucket to the Ratepayers well so many times before said well has dried up….like now.

Why is City Council trying to make money from electricity?

This basic utility should not be used as an income generator!

For sure; electricity is a cash cow to find other expenses; like wages

Just a way to get someone to pay for all the illegal electricity users and informal connections???

Time to get off the grid. And you can start small. Solar for lights Tv. Gas for stove. Solar geyser perhaps gas. A 4 watt smart globe is similar to a normal 60w globe and the cost R26.

They are loading your rates account, so getting off the grid will be temporary.

They are “trying to align” pre-paid and post paid so eventually you will be paying R800+ per month before you use electricity.

What is being done about the current COJ billing crisis – how and who do we escalate issues to. We have reported a meter reading decimal point error on our account now for months, this never gets resolved yet the queries get closed and every month we have to report it again?

There seems to be a reluctance in the accounts division to resolve queries and assist citizens – is this all just another cover up for fraud being done at COJ. We got a call from someone at COJ who said if we pay them money on the side they will resolve out billing issue?!!

So much for the DA with all their finger pointing and bright spark ideas.

Just the same as the rest. No real plan or ability.

It is getting closer and closer to the stage where the middle class will get fed up with this. More and more people can not afford to live as middle class anymore.

I don’t think they realize what effect this has. Property prices are tanking.

We should call for immediate re valuation of properties and that property rates and taxes be adjusted down immediately. This should be done every 6 months. We are being overcharged at the moment.

Why should we keep on excepting it?

Once again NERSA working against the consumer. NERSA shouldn’t have ‘opened’ this door as all Metro’s are now using this as a stick to feed a corrupt system.

Did you know that SA’s electricity price is already higher than both New York and London based on residences of the equivalent size? And based on current exchange rates. Wow, it’s almost worth emigrating just to save on basic services these days!

Average cost of electricity in USA is 12 cents (US) or about R1.68 per kWh and that is for about 900 kWh per month, so South Africa is more expensive than half of the USA.

Not to be pedantic but most quick google results of US electricity prices will not tell you
1 – the Sales Tax that should still be included
2 – the TDU charges, or delivery fees, which have both fixed and variable portions.

Unlike SA, electricity energy prices are mostly privatised, and in most states deregulated. Thus these fluctuate monthly, like energy prices in the open market, but many of these companies give you contracted deals to fix your rate for 12/24/36 months.

Then there is the utility fee, and although these companies are also private, their fees are regulated by government. These are the guys getting the electricity to your house. Your google would not have included this as it is not seen as an electricity fee.

But as you have not included a reference to your stat, maybe you did add this and then it is comparible

Did JHB residential post-paid users previously only pay for kWh? ie no monthly connection fee?

Where is all this leading South Africa to?

ADD THIS TOO…

VAT upped to 15%
Municipal Rates hiked in July
Retrenchments left right and centre
SOE bailouts

I fear for the future.

and in Tanzania they want to now tax wigs and hair extensions…socialism running out of cash

This is nothing more than a desparate attempt to recover previously looted and/or mismanaged funds. Exactly the same practice was implemented some ten years ago when they blew R300m on that monumental stuff up called e-Natis. They imposed a R30 ‘Transaction Fee’ on each of 10m vehicle license renewals as a supposed once off charge to recover the funds. Guess what, the next year that same Transaction fee was still there – and the year after and the year after… Then some 6-7 years later they had the audacity to increase the charge to R36 and then to R42! They reamed us for 10x the original e-Natis cost (>R3bn) over the past 10 years – and counting.

This is what happens when you let any halfwit run a municipality. We have semi-literate mayors paying themselves R1million – R2,5million a year; municipal employees “reluctantly” receiving huge mandated annual increments – and then getting a COL increment on top of those; and “councillors” (were there ever functionaries anywhere else in the world like these?) getting R600 000 pa just to turn up at meetings. No wonder there are no funds left to provide for services that should be more than covered by ratepayers’ contributions. And that’s not even allowing for the endemic corruption that goes on and on, unpunished…

So much for the DA with all their finger pointing and bright spark ideas.

Just the same as the rest. No real plan or ability.

It is getting closer and closer to the stage where the middle class will get fed up with this. More and more people can not afford to live as middle class anymore.

I don’t think they realize what effect this has. Property prices are tanking.

We should call for immediate re valuation of properties and that property rates and taxes be adjusted down immediately. This should be done every 6 months. We are being overcharged at the moment.

Why should we keep on excepting it?

This begs the question: WHEN are non-paying residents in Soweto and elsewhere going to be cut off until they cough up? To paraphrase a well-known idiom: MANY HANDS MAKE LIGHT(s) WORK.

Another quick R 19 + Billion, forget about the approved kWh Nersa increase they are small in comparison to the increases on Eskom and municipal network charges. Cape Town had 130% increase last year and nobody said a word…

These increases are not sustainable.

“….its impact is outsized on those households who use less electricity.”

No familiar with the word “outsized” – so can someone please explain what is the impact on households that use less electricity?

I live in a medium sized town. They are planning to count the taps in each house and business. They want to implement a tap tax.

Many years ago an elderly man made this comment : In Suid-Afrika sal nie een geweerskoot geskiet word nie. Hulle sal ons dood leef.

Just another reason to accelerate getting off the grid, thanks DA

It’s time for the Middle Class to rise against this. How much longer must we endure paying for the failings of government and SOEs? Amandla!!!!!

All these comments (well, most of them) have valid points. But they are still just comments. And the corrupt criminals stealing our money will carry on ignoring them.

Actions speak louder than words. It’s time for one of the smaller political parties, or some other organization, to make a name for themselves, stand up and DO something. What that “something” is – I’ll leave that to them to decide.

i Refuse to pay my bills.They can cut my Utility and will live with Gas and Coal just like the old days 50 years ago.

They target the poor Citizens in Pretoria and Joburg now.

“Due to the decline in usage, it is not possible to rely on electricity consumption to cover fixed costs as this will lead to unequal distribution of costs among the customer base”

Correction – illegal connections, theft of electricity, malicious damage to public infrastructure and decades of non-payment …”has led to unequal distribution of costs among the customer base”

Stop with the BS DA!….you fool no one!

Come the next elections, citizens can reward the DA by voting VF+.

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