Outa takes on municipalities planning to overcharge electricity tariffs

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Outa is taking on 24 municipalities who are applying to the National Energy Regulator of South Africa (Nersa) to hike their electricity tariffs below the set benchmark for this year.

According Outa’s energy portfolio director, Ted Blom, who was reportedly the only member of the public to object to the increased hike over and above 1.88%, all the applications are defective as they did not include audited costs for each category of user.

Nersa capped the municipal increases at 1.88%, which comes into effect at the start of the municipalities’ new financial year on 1st July. This takes into account the Nersa-approved 2.2% increase in Eskom’s charges to the municipalities from 1st April, the municipalities get a lower increase because Eskom’s bulk supply is only part of their expenses.

The biggest hike applications are from Thaba Chweu local municipality (for a 12% increase), Msukaligwa local and Phumelela local (both 10%) and Magareng local (9%). Two metros applied for increases: the City of Cape Town (3.34%) and the City of Johannesburg’s City Power (2.28%).

Some municipalities failed to turn up at the one-day public hearings to motivate their applications, another reason to dismiss them, Blom said.

“The municipalities’ applications for exemption should be rejected in full, and a proper enquiry constituted outside of the price increase timetable to interrogate the validity of each municipality’s tariff regime,” Blom said, adding that the applications indicated deviant or poor behaviour by management of these municipalities and were thus their own fault.

This includes poor debt collection, high historical outstanding debts, poor billing records, non-existence of meters, large non-technical losses and massive overheads in staff.

Blom said the municipalities’ tariffs are a mess, with some municipalities illegally using electricity surcharges to subsidise other services and rampant fraud and overcharging in the voucher business and bulk purchases of electricity in residential complexes sometimes charging their residents higher than legal rates.

Outa said it has repeatedly called for municipal tariffs to be recalculated off a zero base so that exemptions and surcharges can be properly motivated.

The alliance said it is assessing the existing municipal tariff framework, Nersa’s process and timetable for setting these, as Outa believes the framework is outdated, cumbersome, contradictory and doesn’t allow sufficient time for public participation.