Electricity Tariffs: Municipal Mark-Ups Dwarf NERSA Tariff Increase

GOOD Statement by Brett Herron,
GOOD Secretary-General & Member of Parliament

16 January 2023

The only beneficiaries of the shocking 18.6% electricity tariff increase announced last week, besides Eskom, are South African municipalities which place massive mark-ups on the prices they charge consumers.

Whereas Eskom is now permitted to charge 173.80c per kilowatt hour (kWH), Cape Town, for example, charges residents between 298.30c k/WH and 362.72c k/WH. That’s right: Cape Town households using more than 600 /k/WH per month pay more than double the NERSA regulated tariff.

By adding an extra 25c k/WH to the tariff in the current financial year, Cape Town has budgeted for a surplus of R1.78 billion from electricity sales. (Cape Town Mayor Geordin Hill-Lewis neglected to mention the City’s mark-ups when gushed that the Eskom increase unfair, unaffordable and unjust.)

Cape Town is not the only City that radically marks up its electricity prices.

In Johannesburg, households are charged between 209.73c k/WH and 274.11c k/WH, depending on the amount of electricity they consume.

eThekwini currently charges residential consumers 257.89c k/WH.

To further aggravate matters, across the country, right now, municipalities are preparing their 2023/24 budgets which will include mark-ups in the prices they will charge residents for basic services.

Municipalities must raise revenue in order to operate essential basic services, but in the current financial climate, with many citizens battling to feed their families, let alone pay for electricity, the mark-ups must be fair, affordable and just. A zero % mark up in the next financial year will still leave municipalities with surplus revenue.

The truth that Mayors aren’t keen to reveal is that if municipalities tightened their belts around non-core services, and eliminated excess and waste, they could go a long way to absorbing the electricity tariff increases, and sparing long-suffering residents more hardship and pain.

Now is the time for Mayors and councillors across the country to show leadership and ingenuity, dig deep into their budgets, weed out historical but non-essential allocations, and give the people a break.

Municipalities can make a real difference to the quality of people’s lives this year by reducing rather than increasing their mark-ups.

In a similar vein, Mayors and Councillors must commit to ensuring that the equitable share, paid to municipalities by allocation in the national budget (calculated on the number of indigent households per municipality) actually provides the free basic services to indigent households.

These funds must not become part of municipal revenue used for salaries, perks and other non-essential expenditure.

Media Enquiries:

Brett Herron, GOOD Secretary-General & Member of Parliament
Cell: 0825183264
Email: bretth@forgood.org.za

Janke Tolmay, GOOD Media Manager
Cell: 0733671223
Email: janke@forgood.org.za