Doug Hoggarth, Fish Hoek
It is generally understood and accepted that, due to the drought, stringent water use restrictions were introduced. We were requested, or rather, “instructed” to reduce consumption and in order to ensure compliance, a seriously escalating tariff was introduced to penalise those who may have been inclined to disregard the rules.
The escalating tariff should have made adequate provision for the loss of revenue in respect of the reduced sales. lf it didn’t, someone got their sums wrong.
As a result, someone stayed awake at night dreaming up another way of extracting even more money from us and introduced a “standing charge” based on the size of one’s pipe.
While a charge for services rendered may be determined on this basis for some businesses, it has absolutely no merit in this situation.
It is quite possible that I may have been endowed with a bigger pipe than some other blokes, but the size of my pipe has no influence on the amount of water I use.
A meter is installed for this purpose. There is therefore no justification to charge me a higher price for water than that charged for someone with a smaller pipe.
It is widely accepted that size doesn’t matter.
It’s what you do with it that counts!
Well, my big pipe performs no other function than to deliver water into a meter which measures the amount of water that passes through it, just as it does for blokes with smaller pipes.
For the record, my water account for 17 January 2018, reflects an amount of R28 in respect of 7kl of water used. However, the account dated 10 July 2019 reflects an amount of R 107.68 also for 7kl of water used. This equates to an increase of almost 385% and this excludes the “standing charge” in respect of my big pipe.
When the additional R100 standing charge is factored in, it pushes the increase to just over 740%. To add further pain, VAT is also added proportionally.
ln responses to previous correspondence, we have been given statistics reflecting the extent of the facilities being serviced.
I request Xanthia Limberg to inform us by what percentage these facilities have increased since the commencement of the drought.
We are now being informed that the standing charge must remain in force because we are using 30% less water than we were prior to the drought.
Of course we are.
What else would one expect? Water restrictions are still in place despite all of the dams being full. Remove the restrictions and we will probably increase the frequency of having a shower to more than once a month and, consequently, more water will be sold. The tariff should then revert to the levels prior to the drought.
So, I suggest that it’s high time that Xanthia Limberg stopped telling us fairy stories and thereby insulting our intelligence.
- Xanthea Limberg, mayoral committee member for water and waste, responds:
The introduction of the fixed part of the tariff (fixed basic charge) was not due to a previous miscalculation in setting the volumetric tariffs. Tariffs are set to recover the cost of providing the service.
Therefore, when the City introduced the fixed charge, the amount of revenue that was required from each kilolitre (kl) on the variable tariff was adjusted to only generate the remaining amount required.
Before the drought, wealthier, high-consuming customers with big water-intensive gardens and pools, would effectively subsidise low consumers through water purchased in the higher tariff steps.
Because tariffs are set based on a progressive step tariff model, consumers with high consumption paid a premium for the high usage. This is how the lower steps were subsidised.
However when residents reduced consumption during the drought, the resources that helped keep the consumption in the lower steps at low tariffs disappeared.
In short, pre-drought tariffs were reliant on cross-subsidisation.
The City thus had to implement alternative mechanisms to cover costs of effectively running the service, in a manner that spread the load as equitably as possible.
Fixed charges are a good way to address revenue stability challenges in businesses/utilities with a high proportion of fixed costs. Climate change modelling for South Africa has predicted more frequent and intense droughts, which will come with more variability in consumption/sales of water, so the fixed/variable tariff model is a better fit if we want to prevent revenue shortfalls that future droughts are likely to cause.
The fixed charge is based on meter size, which is determined by the potential water demand on the property. Larger properties with more taps, toilets, geysers and appliances, are supplied through bigger connections, and create a bigger potential load on the network which the network needs to have available at all times.
To explain why the consumption based tariffs are still higher than before the drought, despite the implementation of the fixed charge – currently, the volumetric usage has only returned to about 70% compared to pre-drought, and very few properties have returned to consumption levels that previously enabled subsidisation of the first few steps of the tariff.
Now that drought-level water restrictions have been lifted, however, and as the City’s augmentation schemes are incrementally incorporated to the system, it’s likely that many properties’ consumption will begin to tick upwards once more, causing them to enter the higher tariff steps, progressively allowing a greater degree of crosssubsidisation of the lower steps.
For now, however, these are necessary to ensure that the City is able to build resilience against climate change through both water augmentation and water demand management initiatives which must proceed without delay. Details of these programmes available at www.capetown.gov.za/general/cape-townwater-strategy.