Cape Town civic group to protest against 17.6% electricity cost increase

A protest will take place this weekend against the City of Cape Town’s decision to increase its electricity rates by 17.6%, above the 15.1% ceiling set by the National Energy Regulator of South Africa (Nersa).

The domestic energy rates for 2023–2024 took effect for customers in the City of Cape Town supply area on 1 July, 2023.

The city has responded that it cannot maintain the suggested 15.1% guideline hike that was set by Nersa.

#StopCOCT, which is leading the protest at the Civic Centre on 26 August, has accused the city of taking an unyielding stance towards the public and Nersa and was “violating the rule of law” with its electricity tariff hike for 2023/24. 

#StopCOCT in partnership with its sister organisation Electricity Tariff Must Fall will be protesting against the City’s decision to raise electricity prices above the rate recommended by the energy regulator.

The City also increased power rates over Nersa’s cap last year, which was a 9.6% price increase when Nersa set the cap at 7.46%. This is an unresolved formal dispute process that remains ongoing.

This year, many municipalities in the Western Cape such as Beaufort West, Breede Valley, Bergriver and Bitou Municipality applied increases according to Nersa’s tariff benchmarking methodology of 15.1%.

‘People cannot afford’

For some electricity consumers, the increase has caused financial hardship, particularly for the poor and retirees. Many are unable to cover the new rate hike.

Natasha Gertze, the founder of  Electricity Tariffs Must Fall told Daily Maverick that she thinks the council can afford to keep the prices low by using other sources of money. 

“They can look into other avenues, but not the electricity because electricity is an everyday need for us as citizens. This is unlawful but the City sticks with their statistics and the fact of the matter is that people cannot afford and that is being overlooked,” she said. 

She added, “This puts us in a worse position because there is no relief for the working class since they are the ones paying for other people’s expenses”.

eThekwini boycotts

Daily Maverick reported this week that eThekwini Municipality had proposed a 21.9% electricity increase, but Nersa reduced that to 15.1%, ruling that it should stick to the approved tariff of increase. 

Many residents of Westville, Durban, are refusing to pay due to exorbitant bills and incorrect readings.

Asad Gaffar, the chair of the Westville Ratepayers Association, told SAFM on Tuesday that citizens across the eThekwini Metro are dissatisfied with the City’s lack of interest in comprehending affordability in terms of tariffs. 

Read more in Daily Maverick: Fuming walkout – eThekwini rates boycott rolls on after disastrous meeting with mayor

City of Cape Town protects itself 

Nersa’s tariff standards, according to the City of Cape Town, have previously been found to be illegal and void. 

According to a report by Eyewitness News, the Gauteng high court granted Nersa a year in October of last year to create a new method for calculating yearly electricity increases for municipalities.

Pressure is mounting on the City of Cape Town after it implemented its 17.6% electricity tariff hike. 

News 24 reported that spokesperson for Nersa, Charles Hlebela, confirmed the energy regulator had received several complaints. 

“Nersa is not able to indicate the number of complaints received at this stage, suffice to indicate that Nersa is receiving several complaints regarding the alleged tariff increase implemented by the City of Cape Town,” he said.

He added that “Nersa will investigate the complaint in line with its dispute resolution procedure to establish whether the City of Cape Town is in breach of this section or not.” 

Political factions weigh in

There is an upsurge of opposition to the tariff increase by organisations and parties that include Action SA, SACP, Al-Jama-Ah, Cosatu, EFF, and the Good Party.

The Good party has submitted a formal request to energy regulator, Nersa, asking it to reject the city's tariff increase.

Cape Town councillor responsible for finance, Anton Louw from the Good Party said residents are harmed by the highest tariff increase in the country. 

“This increase was way above Nersa’s approved 15.1% electricity tariff increase for municipalities,” Louw said. 

Beverley van Reenen, the City’s Mayoral Committee Member for Energy said the City cannot maintain the 15.1% suggested by Nersa for municipalities. 

“This would place service delivery and the ending load-shedding programme at severe risk while bringing minimal relief at an individual household level [4 cents per unit for lifeline customers and 8c per unit on the Domestic tariff], Nersa’s recommendation of 15.1% for municipalities is not sustainable for the city.”  

According to a report in News24,  she stated that the City spends about 70% of its tariff income to buy electricity from Eskom, with the remaining 30% covering the costs of a reliable electricity service and plans to end load shedding. The City would suffer a budget shortfall of more than R500 million based on the Nersa guideline for tariff increases that does not allow for the City to recover its costs.

Speaking in the City Council at the Civic Centre on Thursday, 24 August, Cape Town Mayor Geordini Hill-Lewis said Nersa’s tariff benchmarking methodology is illogical and incomprehensible. “Nersa is not adequately accounting for all of the cost bases that contribute to the tariff choice in Cape Town and elsewhere. Simply put, it is unfathomable and irrational,” he said. 

The new tariffs

The monthly costs in the city apply as follows, from 0-60 or 25 kWh lifeline customers get free basic electricity allocation (depending on average consumption) and from 60 or 25 to 600 kWh customers pay R183.96 per kWh (excl. VAT) or 211.55 per kWh (incl. VAT) 

If customers use 600 plus kWh they pay R370.92 c per kWh (excl. VAT) or 426.56 per kWh (incl. VAT). 

For customers that qualify for an indigent rebate or a pensioner or disabled rebate, the City exempts them from the municipal property valuation criterion. However, they’re required to keep their usage below 450 kWh per month. DM