Tumi Mashishi
City Power dismisses false claims making rounds in relation to the tariff adjustments that are set to come into effect in July. The City of Johannesburg’s energy utility has dismissed information suggesting that all prepaid electricity meter users will be charged R553.73 as part of the new tariff regime. City Power says the claims are untrue and misleading. It says the public consultation process on the 2024/2025 tariff changes is still ongoing and no decision will be made without residents of Johannesburg, particularly City Power customers, making their inputs. Every year, the entity reviews its tariff structures and tariff levels to determine changes in the price of electricity for its customers. During this process, City Power must not only comply with the Municipal Finance Management Act, the National Energy Regulator of South Africa (Nersa) regulations and guidelines, but also consider the expectations from the City of Johannesburg as its shareholder along with all customers who are supplied by the entity.
City Power always approach this process with due sensitivity, as proven in the past, by going out of its way to ensure that it minimises the impact of the tariff increase on customers.
The entity has been applying lower tariff hikes compared to the Nersa approved rates.
The customer and stakeholder engagement process, which has already commenced through the integrated Development Plan (IDP) and other regulated consultation processes will discuss the proposed 12.72% tariff increase that will come into effect in July, if approved.
From those discussions, a decision will be tabled at the Johannesburg City Council considering the interest of the customers and the inflation in operational expenses.
It is important to emphasise that City Power has not reached that stage yet and any suggestion that seeks to claim that we have, is false and unfounded.
City Power urges its customers not to panic by misinformation shared in various platforms that seek to suggest that the upcoming tariff increase will be astronomical in comparison with other municipalities or Eskom and that those adjustments will apply uniformly.
City Power has proven in previous years that it takes the input of its customers into consideration when formulating the tariff structure.
That’s why the entity has been implementing lower tariffs in comparison to the approved Nersa rate and other municipalities.
Even during this tariff cycle, the applicable rate to individual customers will vary to ensure that low-income customers and those who fall under the indigent programme are not charged the same rate.
The following key variables must be considered before tariff changes are determined:
· Nersa Municipal Tariff Increase for FY24/25, which is yet to be determined,
· City Power cost structure including bulk purchases as well as expected increases in each of the respective elements of the cost structure,
· Shareholder, stakeholder, and customer considerations,
· Findings of the City Power Cost of Supply Study, including but not limited to financial sustainability, cost reflectivity and affordability of tariffs.
City Power cost of supply study was finalised and submitted to Nersa during FY21/22. The cost of supply study had several findings which are to be considered during this tariff cycle.
PROPOSED TARIFF STRUCTURAL CHANGES AND TARIFF INCREASE FOR FY24/25:
· Subdivide the residential prepaid customers into two sub-categories namely residential prepaid (low), to cater for the indigent customer and the residential prepaid (high) to cater for the rest of the residential prepaid customers,
· Residential prepaid (low) to be exempt from paying both the service and capacity charges (R/month) to cushion our indigent customers in consideration of the current economic climate. This is to ensure that tariff remains targeted at the low use indigent customer.
· The residential prepaid (high) customer to start contributing to the service and network operating and maintenance cost to gradually align to the tariff applicable to the residential conventional tariff.
· Migrating all business customers to be on the same tariff irrespective of the payment platform (i.e. both conventional and business prepaid customers to be on the same tariff), in the interest of aligning to cost of supply findings as well as necessary tariff rationalisation.
City Power would like to warn political parties to refrain from using an important and emotive subject such as tariff changes to cause alarm, for political point scoring.
Once the necessary processes have been concluded and a decision has been made, City Power will inform customers on the implications of the changes which are necessary for the sustainability of the utility and its ability to continue providing improved services.
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