Paying mega bucks for your watts

Observatory resident Jill Darvall has to find an extra R300 a month to feed her meter after the new electricity tariffs kicked in on July 1.

They are based on property values, and it doesn’t seem to matter if you’re a tenant, like Ms Darvall is, or if you own the house.

“I have been living here for 21 years, and I have never bought electricity for more than R200. The municipality encouraged us to use under 300 units a month, and we were rewarded with 60 units free. For my R200 at 0.97c a unit I would get R185 units + 60 free on ‘Lifeline’,” Ms Darvall said.

“They have now changed us to ‘Domestic’, and for my R350 at 1.69c a unit I get 180 units, leaving me short of 65 units for the month. I have to spend R150 more to get the extra 77.90 units. So I now have to fork out R500 a month to get the same amount of units. Who in these hard times has an extra R300 a month.

“The municipality now says it is no longer charging on consumption but on the value of property. Like thousands of other people, I rent my property and, like thousands of people, make the effort to use electricity sparingly. So why are we being penalised for property that we rent? I think this is grossly unfair to many who can’t afford this hike,” Ms Darvall said.

The City said it had received a few complaints about the hikes, but it was aware of the outcry on social media.

Mayoral committee member for finance, Johan van der Merwe, said that when the Lifeline had been introduced, property values were not considered. Residents only had to use less than a certain amount to qualify, as, historically, higher consumption was a fairly accurate indicator of economic prosperity.

“Now residents must live in a property valued at less than
R400 000 to qualify for the Lifeline. Firstly, the price of electricity has risen to the point that, in the interests of fairness to the rest of the rates base who provide the subsidy, the City must make sure that only those who are truly indigent qualify.

“Secondly, customers are able to reduce their consumption of municipal electricity to the point where it no longer reflects their economic status, because they have access to other technologies such as solar heating.

“We would like to tailor the criteria more carefully, but it would be impractical from an administrative point of view. Property value is a reasonable indicator of ability to pay, and it is already being tracked for determining rates contributions. So it was logical to extend this methodology to electricity users,” Mr Van der Merwe said.

He said the monthly service charges, which were proposed in the draft budget, had not been scrapped, just deferred to allow for a comprehensive publicity campaign and public participation process to be undertaken.

“The property value requirement for the Lifeline has been in place for some time, especially new connections. All properties historically placed on Lifeline valued at more than R1 million were moved across last year. This is the next phase.

“The City believes this is fair. Although customers moved off the Lifeline tariff due to property values no longer benefit from the same high subsidy, they are still able to buy electricity more cheaply than it costs to supply it, so long as their consumption remains under 600 units a month. The level of subsidy (which) ranges from R313 a month (or 45%) for those using 200 units to approximately R118 a month (or 12%) for those using 450 units (the consumption threshold for the Lifeline tariff), gets smaller as consumption increases,” Mr Van der Merwe explained.

Mr Van der Merwe said the
40 000 residents migrated to Domestic had so far been shielded from the effects of the Eskom increases as they had been subsidised by other residents. However, given the impact of those increases on the consumers shouldering the burden, the City had to now tighten up on who received what level of subsidy.

“There is a significant portion of residents living on properties valued between R400 000 and
R1 million who have never had access to the Lifeline tariff due to higher consumption, but also have very tight budgets,” said Mr Van der Merwe.

“Those supplied via credit meters do not have access to the Lifeline tariff as a rule. One of the conditions of qualification for subsidy is that controls are instituted to protect against the accumulation of bad debts which must be covered by the rest of the customer base.

“Property value is widely used to determine the application of different tariffs. Some cities, such as Thekwini, require you to be registered as indigent to receive any level of support.

“Each metro develops tariffs that are workable according to their context. Each metro will have a different mix of industrial, commercial and residential customers, and, as such, will have different levels of cross-subsidisation across these categories.

“Johannesburg City Power has a lot more big industry, so they can subsidise residential customers to a larger extent without the kind of impact on non-residential customers that the City of Cape Town would face.

“We also start with a 3% disadvantage compared with Johannesburg because we are further away from Megawatt Park,” said Mr Van der Merwe.

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