Hazel Huddlestone, Fish Hoek
I accept that the City of Cape Town needs a stable stream of revenue, as explained by Mayco member for water and waste, Xanthea Limberg, but I can’t understand why the amount of R100 per household was decided upon, when the levy was introduced.
The R100 levy extra every month came as a shock to myself and the majority of ratepayers.
Due to the urgency of the situation then, we had to shut up and listen, which we did and have been paying this exorbitant levy ever since.
Now that the drought has been broken and the dams are close to 100% full, surely it is reasonable to expect the city council to wake up and listen to its ratepayers and at least consider adjusting the water levy down?
Instead they have raised it by R4.50 to R104.50 every month, from July 1 this year for every ratepayer household.
How much more revenue per month does this compute to?
Public-funded money, by law, must be transparent and available for the public to access. It would be appreciated if the council could give a breakdown of how much is minted out of the levy per month and present the total balance available regarding the water levy.
Again the ratepayers need to understand why is it necessary to increase the levy? What is the justification of such a high levy?
There must be ongoing growth by interest on the invested money.
In addition, the levy money just keeps rolling in to add to what must surely already be a substantial amount, considering the time frame since we have been paying the water levy.
Perhaps it’s time for #DroptheZero
Xanthea Limberg, mayoral committee member for water and waste, responds:
It is important to re-emphasise that the R100 referred to is not a water levy, an additional charge, or a means of generating additional revenue in addition to the standard tariff structure to recover the cost of providing the service. It must also be emphasised that the City does not budget for profit/surplus from the sale of water and seeks to keep costs of service delivery as low as possible.
Tariff modelling requires a balancing act of predicting the volumes of water that will be sold, and aligning that with the cost of delivering the service.
The amount referred to is the fixed basic portion of the tariff structure and protects the system from becoming destabilised when water consumption drops.
This kind of resilience is especially significant in the context of climate change, when increased droughts may lead to extreme fluctuation in water use.
The fixed basic charge is based on the meter size, which determines the potential maximum
water demand on the property and is calculated to cover approximately 25% of the fixed cost of running the system. Fixed cost refers to costs faced by the City even if no water is sold (for instance maintenance).
Most households are supplied by a 15mm water meter and the fixed basic charge for this size is R58.52 (excluding VAT) and R67.30 including VAT. The larger 20mm water meter is less common for residential properties, and is charged at R104.50 (excluding VAT) and R120.18 (including VAT).
Prior to the drought, the tariff was based only on how much water residents use. The drought revealed that if consumption dropped significantly (i.e. beyond levels we could have expected before the drought), it could also affect our long-term future by taking away resources for necessary maintenance of the water service and disabling cross-subsidisation of the poor. The sanitation service is also an extensive and costly component that is often overlooked.
While the dams are currently fuller than they have been in years, municipal water-consumption levels are roughly 30% lower than they were before we were confronted with the shock of scarcity. Meaningful behaviour changes by residents have played a significant role in the dam levels being as full as they are currently.
As such, the City changed the tariff structure so that a fixed portion of the revenue necessary to run the system responsibly is guaranteed no matter how much water residents consume. This is a funding model that is used in municipalities across South Africa and has the advantage of making the system more resilient to climate change.
Should the fixed basic charge be removed, the tariff charged on the consumptive tariff will need to be substantially increased to still generate the revenue to cover the cost of providing the service.