Power price on the rise

That gasp when you open your electricity bill with the latest round of “tariff migrations” could turn to a howl the following year if the City of Cape Town’s proposed monthly tarrif, on top of the electricity bill, is put in place.

“The City of Cape Town is punishing us for being on Lifeline electricity tariff and saving on electricity consumption,” said Echo reader and Fish Hoek resident Michael Burke.

“I wrote to Helen Zille and Patricia de Lille long before the objection period expired for the new budget 2016 to 2017.

“Helen Zille’s office phoned me to say they had forwarded the letter to the mayor. The mayor’s office said they can’t find that letter. I sent another letter to the mayor on June 9. Still no phone call or reply from the mayor,” he said.

He said his Lifeline tariff was R1.10 a kilowatt unit and on domestic tariff it would go up to R1.87 plus a service charge of R2.42 a day “and all because they want to link the value of a persons house from one million rands onwards. If you are on prepaid now, nothing is cast in stone.”

Mr Burke is referring to two issues, said independent energy auditor Kim Kruyshaar of Green Audits. The first is the shift off lifeline tarrif, the second is a monthly service charge called the home user tarrif.

“As of October 1 all households on lifeline with a property valuation of more than R1 million will be moved to the domestic tariff. Many households – including mine – will feel the shock of the hike from lifeline to domestic.

“The reality is that lifeline is a subsidised tariff designed to provide relief to low income households and is not a reward for energy efficiency.”

This comes as something of a shock to people who have done their best to be energy efficient or gone the alternative energy route, thinking their electricity costs might come down, not realising that this was an issue separate from energy subsidies for poorer people.

Initially, Ms Kruyshaar said, the City had used electricity consumption to try to identify those in need and thus offer them below-cost electricity, as a means of offering basic services. But electricity consumption is not an accurate indicator of wealth or the lack of it – for example a large but poor family could use more electricity than a wealthier but energy-conscious smaller family.

“As a result, many households that did not qualify (as being in need) ended up on lifeline, including mine. Households on the monthly rates and services account system and which were not registered as indigent were shifted across two years ago,” she said.

“With new software, the City is now able to link households on prepaid meters with their rates accounts, spelling the end of the subsidy.”

The City’s mayoral committee member for utility services, Ernest Sonnenberg said the City rejected the accusation that residents were being punished.

He said the main reason changes were made to the qualification requirements for the lifeline tariff was to keep electricity affordable for all customers, not just a select group and, confirming Ms Kruyshaar’s analysis, said alternative technologies made consumption alone a poor indicator of ability to pay.

Significantly, he said, another reason for the changes was that, with the use of alternative technologies, the City was earning less income by selling electricity.

“On 1 October 2016 all lifeline customers with a property value of over R1 million supplied via a prepaid meter will be placed on the lomestic tariff. All lifeline customers with credit meters were moved to the domestic tariff on July 1, 2014,” he said.

“Price increases from Eskom are having a profound effect on the local economy. With this in mind, it is important that only those customers who are truly indigent continue to be subsidised by other residents. This latest tariff migration has allowed the City to reduce the average tariff increase for 2016/17 to 6.62 percent as opposed to 8.26 percent.”

There were exceptions, he said.

“Please note that if a customer receives a senior citizen or disabled persons rebate in terms of the Rates Policy or is registered as indigent in terms of the Credit Control and Debt Collection Policy, the property valuation and metering requirements stated above fall away. Homeowners over the age of 60 whose household income is less than R15 000 a month currently qualify for the senior citizen rebate,” said Mr Sonnenberg.

Ms Kruyshaar said the impending monthly service charge referred to by Mr Burke was of bigger concern. This was the Home User Tariff to be introduced in 2017/18, “probably as an addition to the service fees on our rates accounts”.

This would be a return to the old system of charging separately for the electricity used and for the use of the City’s infrastructure.

“Because the sale of electricity units has declined since 2009, largely in response to Eskom’s price hikes, the City is being squeezed by reduced revenue from sales but increasing infrastructural and funding demands.

“It is a conundrum that needs creative solutions if we are to live in a functioning but affordable city. I am not convinced that a flat rate monthly subsidy is a fair solution.

“This tariff will be advertised in next year’s draft budget and if not challenged it is likely to be implemented. We still have time to put on thinking caps to come up with a more equitable solution – hopefully one that the City will be open to,” she said.

* For more info on the proposed Home User Tariff go to: http://greenaudits.co.za/cape-town-domestic-electricity-2016-new-service-fee/