Cape Chamber Objects to Proposed Increase by Municipalities

THE dispute between the National Energy Regulator (NERSA) and many of the country’s leading municipalities will come to a head on June 3 at a public hearing where the proposed increases will be discussed.

Eskom tariffs have increased by about eight cents a unit but some proposed municipal increases are considerably higher. Cape Town, for instance, wants to increase tariffs for many small businesses by a staggering 23.4 cents a unit – from the present 96.76c a unit to 120.56. It plans to increase domestic tariffs by 15.94 cents, almost double the Eskom increase.

Originally NERSA recommended that municipal increases should be capped at 15.3 percent. Cape Town, however, says that NERSA has no say on what municipalities can charge.

The stakes for municipal consumers are high – a fact highlighted recently by NUS Consulting South Africa. The company, which operates in 13 countries and serves over 10 000 clients, has warned that many South African municipal clients could end up facing substantially higher increases than those granted to Eskom.

NUS says that while an Eskom bulk user would receive increases of about 8,5c/kWh, the average municipal bulk user faces increases of about 13,5c/ kWh, or more, which translates to a 60 percent higher increase in rand terms than those faced by Eskom”s customers.

Therefore, GM Stephan Dolk has warned that, unless municipal increases are kept to below 20 percent, the disparity between an Eskom client and a municipal client could grow substantially.

“If municipalities increase their tariffs at the same rate as Eskom over the next five years, an Eskom client will be paying R1,34/kWh, while a municipal client will pay R2,06/kWh,” Dolk asserts, arguing that any municipal increase above 20 percent hould be “put forward an exceptional motivation”.

The Chamber has objected strongly to the proposed municipal increases pointing out that only the cost of energy supplied to municialities by Eskom has been increased by about 28 percent, but the costs of distributing electricty (the City’s own costs) should only be increased in line with inflation. Distribution costs account for about half of the normal electricity account.

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