Electricity hike killing small businesses

P van Blerk, Murdoch Valley

I am approaching you in desperation that you might be able to get some sensible answers from the City Of Cape Town. Getting to speak to or communicate with anyone is well nigh impossible, as we are told that everyone is working from home, which we understand, but it shouldn’t make communication with the council virtually impossible.

We own a small commercial building, which was re-valued by the council in 2019, and we objected to the new valuation. It became totally unrealistic when the Covid pandemic “lockdown” came into force, and none of our tenants was able to use their offices or shops.

Obviously we made plans and allowances for them with reduced rentals, and some were able to survive by working from home, but several were not, and gave notice, so we had empty premises.

This, we realise, wasn’t the fault of the council, but the fact that they have not taken into consideration or made any allowances for landlords and their tenants is not acceptable, as they are safely working from home while business owners are struggling to keep afloat.

The latest enormous increase in the price of electricity is like the straw that broke the camel’s back, and, once again, businesses who are already struggling are now facing even greater costs.

As a landlord, I have just received my latest rates account and was astonished to see that the Sundries section had gone up considerably, because the Electricity Home User Charge which is applicable for tenants with prepaid meters, has been increased by another R20 per month, from R148.88 per month to R168.95 per month, and as if that weren’t bad enough, they have back-dated it to July 1, charging the extra R20.07, which wasn’t on the account payable on Monday August 2. The fact that they hadn’t programmed their computers to take it into consideration for that time, should be their problem and not our tenants.

When businesses fail because of overzealous charging by council, premises fall empty and commercial buildings lose value, and yet the council doesn’t take this into account.

Cape Town’s economy is in a very precarious situation at the moment, and the old slogan of “This city works for you” certainly doesn’t apply any longer.

Ian Nielsen’s half-hearted attempts at trying to justify these rises in costs are just not acceptable.

The water levy on each and every household in Cape Town must have generated an enormous amount of money, but I wonder how much is going towards finding new water sources when the next drought comes, which it inevitably will.

I know there is a movement being formed called “Stop COCT” (City of Cape Town) and I would like to add my name to the list.

I hope you will be able to get some explanations from City.

• Mayoral committee member for finance Ian Neilson responds: The increase in electricity tariffs is entirely due to Eskom increasing their tariffs to municipalities by 17.8%. The City cannot possibly absorb such increases but has been able to keep its increases to its customers to 13.48%, lower than other metros. All income from electricity tariffs goes towards service delivery in the city.

The fixed portion of the water tariff means that the consumptive tariff is lower than it would be otherwise. All income from water tariffs goes towards the operation, maintenance and expansion of the water supply system. The water and waste department has a R12 billion capital budget over the next three years to upgrade the water-supply and sanitation systems.

The City is sympathetic towards businesses that are struggling as result of the pandemic and lockdowns. Assistance is available on a case-by-case basis, and residents or businesses struggling to make their municipal payments should please approach the City to see if they qualify.

As regards the increase in costs, the City only charges what it costs us to provide services to our customers. These costs go up every year, and although we try to absorb what we can to cushion our residents, we unfortunately cannot absorb the full amount of the increases, especially in the case of Eskom. It is important that municipal income is protected for without it, the City will not be able to provide basic and essential services.

Covid-19 assistance in the form of no-interest payment arrangements is available. Anyone struggling to pay can approach the City and discuss their situation with us. Those who have been hit especially hard by the Covid-19 lockdowns, can enter into a formal interest-free payment arrangement based on agreed to terms. We see the situation quite often where people are struggling to pay for rates and services, but instead of approaching the City so that their particular circumstances can be looked into and a formal arrangement can be made, they unilaterally reduce payments or make ad hoc payments and then fall into arrears. It is better to approach the City first to either access the indigent and rates rebate benefits the City is offering or to make a payment arrangement so that everyone is on the same page and to avoid debt management and legal actions. There is help on offer.

Cape Town provided more protection than any other metro against Eskom’s steep price increases for 2021/22, coming in at 4 percentage points lower than Eskom’s 17.8% national increase. The City was able to absorb some of Eskom’s increase by running a cost-efficient electricity service, albeit on tight margins and with increasing input costs. Electricity is cheaper for consumers in Cape Town who use less electricity in terms of the tariff structure.

The majority of the City of Cape Town’s electricity tariff income is used to buy power from Eskom.

The rest of the tariff income goes for the maintenance, investment and operations of the City’s network.

It is important to note that the City of Cape Town is viewed as a customer by Eskom, and the City purchases electricity on their Megaflex tariff. The City generally pays 3% more on transmission charges than other metros, given that we are much further away from the power stations in Mpumalanga.

The incorrect electricity home user charge of R148.88 (excl. VAT) was unfortunately applied to accounts in July 2021. It has been corrected for the August billing cycle, resulting in a once-off additional charge of R20.07 (excl. VAT) for August only. This is the amount under-recovered in July due to the error. The City sincerely apologises for any inconvenience. For rates or services relief visit www.capetown.gov.za or email indigent.relief@capetown.gov.za or rates.rebate@capetown.gov.za

For businesses and financial hardship due to the Covid-19 economic pressure, email Covid19.Relief@capetown.gov.za