The City of Johannesburg’s electricity provider, City Power, says it has suspended plans to implement a R200 municipal surcharge on prepaid electricity while it engages with stakeholders.

However, the power group’s acting GM Frank Hinda said that the charge will have to be implemented eventually if people want on-demand power.

Speaking to ENCA, Hinda explained that the tariff was approved for implementation from 1 July 2019, but after an outcry from customers, the group decided to suspend the fee until it had consulted with them.

The charge caught many by surprise and would have seen prepaid customers paying between 40% and 65% more on their utility bill each month when tariffs were only going up by 13%.

The acting GM said that there was some confusion around the surcharge itself, with many thinking that it needed to be approved by energy regulator Nersa – however, this was not the case.

“Nersa approves tariffs, and the municipal surcharge is not part of the tariff. The instrument that allows for the network surcharge is the Municipal Fiscal Powers and Functions Act and in terms of its provisions it is then approved at the prerogative of the council,” he said.

In terms of the suspension, he said that not enough consultation was done before implementing it – which the city is now working to rectify – but stressed that a surcharge was still coming.

“Prepaid tariffs are currently consumption based – you only pay for what you use. The nature of the product is that when you don’t need electricity, you switch off, and when you want power, you switch on, and want power on-demand.

“The systems and the infrastructure (for on-demand electricity) need to be maintained by City Power. The intent is to rectify the anomaly in the pricing structure, because (consumption-based) prepaid tariffs do not adequately cover the money needed to maintain and ensure the availability of the product,” Hilda said.

Cape Town and Pretoria

For non-prepaid customers, the Nersa-approved tariffs already factor in maintenance and service fees, he said.

The R200 a month fee is similar to the ‘home user fee’ introduced in the City of Cape Town (CoCT) in 2018, where it applied new network access and an administration fee of R150 to prepaid users living in homes valued over R1 million. For 2019, this tariff is set at R163.32.

When it implemented the fee in 2018, the CoCT said that the surcharge had to be implemented because of reduced use of electricity in the city. Smaller bills meant funds that were needed to subsidise power supply to poorer areas – which are factored into the unit cost – were decreasing.

A similar fee was also shoe-horned into bills in the City of Tshwane in 2019, with the city also attaching a fixed monthly fee of R200 per month.

However, in the City of Tshwane’s case, the billing has been challenged by AfriForum. According to the group, the charges faced by residents are unlawful, as the national energy regulator, Nersa, refused to approve the tariffs.

In Tshwane’s application to Nersa, the surcharge was noted at R120 per month, however the city is now charging R200. The city said that it was a ‘typo’ and the charge is actually set at R56. Nersa will hold public hearings this week on the new charges.

The case has been postponed.

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