‘Yes, it’s going up, but you can do something about it’ – Municipal tariff hikes kick in today

If your home is powered directly by the municipality, brace yourself for a budget squeeze.

Your monthly utility bill is due for a prominent facelift as above-inflation municipal tariff increases kick in on 1 July.

These annual adjustments follow Eskom’s implementation of a 12.74% tariff hike for direct customers earlier this year. This tariff adjustment also saw Eskom increasing the costs of supplying wholesale electricity to municipalities by 12.72%.

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This further widens the gap between inflation and tariff increases, which makes electricity less affordable, says LookSee executive head Marc du Plessis.

“The difficult thing that homes deal with is not only seeing these tariff increases but knowing that it will cost them more to run their households,” he told The Citizen.

Questioning the Cost of Supply

In the build-up to the hike announcement, the National Energy Regulator of South Africa (Nersa) held Special Regulator Executive Committee meetings to assess and approve this year’s municipal tariff increases.

Historically, Nersa passed increases on benchmarks and guidelines to municipalities, until October 2022 when the Pretoria High Court declared the use of price bands and guidelines illegal.

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As a result, municipalities are now required to submit ‘Cost of Supply’ studies to the regulator with proposed tariffs for examination and approval.

These Cost of Supply studies require that municipalities pass on electricity costs to their customers, which reflect the actual costs.

On Friday, the Gauteng High Court prohibited 112 municipalities from implementing tariff hikes due to their failure to submit Cost of Supply studies with their tariff applications.

This means that only 66 municipalities can roll out their increases this week, while the rest have been given 60 days to submit compliant Cost of Supply studies to Nersa for approval.

Below is a breakdown of NERSA’s 2024/25 approved electricity tariff increases for metropolitan municipalities.

Metropolitan municipality	Cost of supply indicated increase	NERSA approved average increase*
Buffalo City	16.9%	11%
City of Cape Town	11.78%	11.78%**
City of Ekurhuleni	12.72%	11.2%
City Power (Johannesburg)	21%	12.72%***
City of Tshwane	12.7%	12%
Ethekwini	18.7%	12.72%
Nelson Mandela Bay	13.04%	13.04%

*As approved in Special Regulator Executive Committee Meeting numbers 375, 376, 377 and 378. 

** Actual tariff increase for CoCT customers will be 7.2% as the municipality had been charging a higher base than what NERSA had previously approved.

*** City Power is also introducing new R70 service and R130 capacity charges for residential prepaid (high) customers.

Value for money electricity supply, please

The state of municipal electricity supply also remains a point of concern for many.

Du Plessis pointed out that while improvements had been made on load shedding at a national level, infrastructure remains a pain point at a municipal level.

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“Yes, we don’t have load shedding at the moment, but there are so many municipalities experiencing power outages due to illegal connections, vandalism, theft and infrastructure breakdowns,” Du Plessis said.

“Households in these areas feel like they’re paying more, but not getting a steady supply of electricity”.

Du Plessis said municipalities now have a delicate balancing act to perform.

“While the above-inflation tariff increases will be disappointing for households and the private sector, municipalities will need to carefully consider how they will control access to, maintain and protect their electricity infrastructure,” said Du Plessis.

‘You can do something about it’

Although many may feel hopeless and look to trim their household spending to afford the steeper electricity bill – all is not completely lost.

“Yes, it’s going up, but you can do something about it,” Du Plessis said, urging households to change their electricity consumption habits.

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Du Plessis acknowledged the difficulty in keeping track of electricity consumption in real-time, explaining it made managing monthly bills somewhat impossible.

“It always comes as a surprise – it might be up or down. It’s very hard to manage what that looks like.

“It’s so hard to change behaviour when you don’t have visibility,” said Du Plessis, adding that switching to solar might be the best step.

Switching to solar could save you thousands

Many homeowners, feeling the pressure of rising electricity costs and inflation, have turned to alternative options to meet their household power needs.

“Households are looking to bring down electricity costs and ensure they have power security. The most sustainable way to achieve that is certainly with solar power,” said Du Plessis.

An electric geyser is among the biggest users of electricity in your home. So, converting your geyser to solar could trim your monthly bill significantly, saving you thousands.

“Taking your geyser off the grid can save you upwards of 40% on your monthly electricity bill,” said Du Plessis.

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If your home is equipped with a traditional electric geyser, you can easily make the switch by converting its power supply to solar.

The process entails installing solar roof panels on your property and connecting them to a controller, which powers up your geyser’s element and thermostat.

Since your geyser is not moved or changed in any way, conversion allows you to switch to solar without the hassle and expense of re-plumbing.

LookSee’s Solar Loan

If you want to convert your geyser to solar but are worried about the associated costs, Looksee’s Solar Loan may be worth checking out.

Eligible homeowners can get financing for their project in the form of a Solar Loan capped at prime plus 2.5%, and payable over five years.

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“The electricity savings families see from getting free electricity from the sun goes straight into the family’s pocket once the solar system is paid off,” said du Plessis.

“In most cases, these savings are higher than the finance repayment costs, meaning that families get a little extra cash to put back into their pocket,” he explained.

Solar’s becoming more affordable

The price of solar system components has decreased by over 30 percent in the last year, improving affordability for a wider range of customers.

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“Because the price of solar panels has decreased significantly, we’ve added two more panels to each of our solar product offerings,” said Du Plessis.

“We want to increase the capacity to generate more power, so you can save more on the electricity bill,” he concluded.