The City of Johannesburg has caved in to public pressure and is scrapping the stiff prepaid electricity tariffs it planned to implement in July.
Funzela Ngobeni, the city’s member of the mayoral committee for finance, said on Tuesday the metro would no longer be implementing the fixed surcharge of R200 per month for prepaid residential and R402 per month for business prepaid customers during 2019/2020.
The city’s official tariff increases, which were adopted by the council recently, came into effect on July 1, and included a 5.5% increase for property rates, 13.7% for electricity, 7% for refuse removal and 9.9% for water.
Ngobeni said the decision on the tariffs was reversed because consumers were already burdened by increasing interest rates, pressure on household disposable income and the sluggish economy that declined 3.2% or by R56bn in the first quarter of 2019.
"We heard the voices of the customers through submissions made during the public meetings. While we consider the tariffs to be cost-reflective, we cannot ignore the calls for relief by our residents," Ngobeni said.
The electricity surcharge was aimed at better aligning prepaid tariffs to conventional tariffs for postpaid consumers, who are billed by the city.
City Power spokesperson Isaac Mangena said the gap between the prepaid and conventional tariffs was caused by basic charges levied on conventional customers over and above the electricity tariff.
"A prepaid customer does not pay basic charges but pays only the tariff, therefore electricity is cheaper for a prepaid customer compared to a conventional customer, hence the City of Johannesburg wanted to address the disparity.
"With the surcharges that we were going to introduce, we were going to charge at least R200 per customer ... in the residential category, instead of R450, which is currently being paid for by conventional customers," he said.
When asked where the money will now come from, Mangena said: "That will form part of the consultation process to come up with ways to ensure the outcome benefits both the customers and the city."
Energy analyst Chris Yelland said it was puzzling that Johannesburg would call for a R200 levy from people with prepaid electricity meters.
"They should be encouraging prepaid users because that helps them with cash flow. It [the levy] makes no sense to me because it will increase the price of electricity for the average user very significantly."
This was "not clearly thought through", Yelland said.
While the city is dealing with the prepaid crunch, analysts have warned that it still needs to deal with its billing crisis among conventional electricity consumers. Fixing the crisis was a key campaign promise of mayor Herman Mashaba, who took over the reins of a DA-led coalition government after the 2016 local government election.
Energy analyst Adil Nchabeleng said it is not rocket science that the city has decided against implementing the tariffs. However, its problems are compounded by not having a proper billing regime in place.
"They know they have faltered on their part on implementing a proper collection regime.... They are sitting on a time bomb, this is not going to be sustainable in the long run."
Nchabeleng said it would take the city about five to 10 years to have solid and proper billing details of all users. "They are dreaming at the moment."
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.