Tshwane metro applies for electric tariff increase

Residents across the capital may soon have to fork out more for electricity. This after the Tshwane metro mayor, recently announced that the metro has submitted an application to National Energy Regulator of South Africa (Nersa) for a special tariff increase of 9,2% for residential users and up to 16% for commercial users.

Although in his budget speech the mayor, Kgosientso Ramokgopa, punted the need for an already hefty electricity increase of 8% he was at pains to make the point that the metro was collecting at least R50 million in electricity revenue per month more than what it had budgeted for. He attributed this to the success with which the prepaid electricity smart meters had been rolled out in the city since October last year.

The mayor also accused Afrisake of causing harm to the city’s finances by interrupting the roll-out of the smart-meters with its urgent application, which was dismissed in February 2014 by the High Court. He pledged to continue the roll-out and advised councillors that he would target the rich residents of the city first to leverage the benefit to maximum effect.

These claims however, were in stark contrast to the contents of the application to Nersa and the presentation by Tshwane’s deputy director for rates and revenue protection, Ndivhuwo Lithole. Lithole told the Nersa Board in his evidence that the metro had actually under-collected electricity revenue by about R490 million in the last financial year. He argued that the metro urgently needed the extra tariff increase to balance its electricity revenue and ‘align’ Tshwane’s tariffs with Nersa recommendations.

To the question by the chairman of the board hearing the application, Thembani Bukula, why it was necessary to increase the tariffs in one year, Lithole claimed expediency but conceded that it was a matter of choice.

Lex Middelberg of ward 91 of the Democratic Alliance gave evidence in opposition to the metro’s special tariff increase application and pointed out that the plea of poverty by the city was disingenuous and contradicted what the mayor had said.

Middelberg also pointed out that the issue of tariffs was an issue reserved for council in terms of the Constitution and that the city’s council had not approved the application for a special tariff increase. He said it was not for the mayor or his mayoral committee to unilaterally apply for a tariff increase and make council fait accompli thereto after the fact.

Dealing with the material contents of the application he referred the Nersa Board to the shockingly high levels of uncollected consumer debt. As at the end of the last financial year the figure stood at some R4,5bn uncollected of which 53% was deemed by the auditor general to be unlikely ever to be collected and had to be impaired. He said that in last year alone R733m was impaired as uncollectable and that it was expected that this year the write-off will rise with an additional R950m to be impaired while the issue was further exacerbated by the enormous losses in electricity distribution through theft and reticulation failures, which had also drawn the attention of the auditor general.

“Both these issues are issues of bad management. Before the metro approach Nersa, it should first collect its debtors, resolve its management failures and repair technical faults,” he said.

Middelberg concluded his presentation to the Nersa by saying that to increase the tariff will amount to ‘rewarding bad management and punishing the good conduct of those who actually pay their municipal accounts, because no increase will ever affect anyone who steals current or refuses to pay their municipal accounts with impunity’.

Nersa indicated that it will adjudicate the application by 30 June 2014.