GOOD Press Statement by Anton Louw,
GOOD Cape Town Councillor Responsible for Finance
21 August 2023
The City of Cape Town has shamelessly imposed a 19.7% electricity tariff hike and is using ratepayers’ money in a pathetic effort to secretly defend its position in court.
While the City has steadfastly sought to convince ratepayers that its 17.6% electricity tariff hike on 1 July was “better than Eskom”, and that it was giving consumers a break, the truth speaks to a different set of facts.
The truth is that the DA-governed City has been overcharging electricity consumers, without the electricity regulator’s approval, for more than a year.
Credits legally due to residents will cost the City hundreds of millions of rands.
It has emerged that despite being in an unresolved formal dispute process with NERSA, regarding the City’s 9.6% tariff hike from 1 July 2022 (NERSA only approved 7.47%), the Cape Town council approved a 17.6% electricity tariff hike from 1 July 2023 when NERSA only approved 15.1%. And to make matters worse the increase was calculated on the 9.6% rate instead of the 7.47% rate.
According to the NERSA Tariff Application Information Sheet (2023-24) the illegal overcharging of 9.6% in 2022 plus an unauthorised and illegal 17.6% tariff hike in the current financial year, amounts to an effective 19.7% electricity tariff hike for Cape Town consumers this year.
That’s nearly 5% unlawful profiteering by the City, at a time of rampant unemployment and pervasive poverty in a severely constrained economy.
The Information Sheet reveals that the City launched a high court application in December 2022 seeking to review and set aside NERSA’s approval for the 2022/2023 municipal financial year. That dispute is unresolved after mediation failed.
The City’s settlement proposal for the 1 July 2022 unlawful tariff hike included a concession that if they could not get a court order supporting their tariff hike of 9.6% then they would introduce a reduced tariff from the date of the court order until the end of the financial year, which was 30 June 2023. They called this their “claw back” proposal.
They went further to concede that if they were unable to implement the claw back between the date of the court order and 30 June 2023 then “it will instead credit its electricity customers by the same amount as the Claw back (i.e., 2.13%) for the Reduction Period, beginning after 30 June 2023”.
The City must stop lying, and pay up.
Mayor Geordin Hill-Lewis is usually very quick to announce litigation and intergovernmental disputes, but when his government is trying to force through higher electricity tariffs, he does not deem it necessary to announce the litigation.
The City further launched an urgent High Court application, again unannounced by Hill-Lewis, in June 2023 against NERSA. The City attempted to get an urgent order to force NERSA to approve its tariff hike of 17.6%.
The application was struck from the court roll on 13 June 2023 with the Court ordering the City to pay costs, at the punitive attorney and client scale, including the costs of two counsel.
This, the City didn’t deem worthy of announcing.
The fact that the City is litigating against NERSA in two separate cases without bothering to disclose it is an abuse of office by Hill-Lewis.
He has not only lied to the people of Cape Town about his government’s right to impose any tariff it chooses; he is using public funds to fight (and lose) High Court cases in an effort to force Capetonians to pay more than they should.
Cape Town Mayoral Committee Member for Energy, Beverley van Reenen has been all over the media defending the City’s position.
If you believe her, “The City would run an estimated budget shortfall in excess of R500-million based on Nersa’s guideline tariff increase. This shortfall would make it impossible and unsustainable for the City to run a reliable electricity service and implement plans to end load shedding,”
But why would you believe her or her boss, when NERSA reveals “ending load shedding” did not factor into the City’s motivation. Instead, the main motivation given for Cape Town’s extortionary and illegal increases “is the decline in electricity sales volume.”
In other words, Cape Town wants to charge more because fewer people are buying or can afford to pay for electricity.
The energy regulator was forced to come to the defence of residents saying: “It is unreasonable for the CoCT to penalize their end user customers by making them pay for lost sales due to load shedding because it is not [the] customer’s fault that there was no electricity to buy.”
The City’s leadership has been caught in a web of greed and lies.
Hill-Lewis must explain why he is litigating against NERSA secretively, and how much credit has accrued to the City’s electricity consumers over the past 13 months of illegal over-charging.
Then he must pay back the money.
Media Enquiries:
Anton Louw, GOOD Cape Town Councillor Responsible for Finance
Cell: 082 377 3335
Email: anton@cisfs.co.za
Samantha Jackson, GOOD Acting Media Manager
Cell: 083 550 9875
Email: media@forgood.org.za