Small businesses are re-homing to deal with electricity price hikes

Companies are increasingly trading Johannesburg’s commercial buildings for the suburbs‚ in favour of cheaper residential rates there.

Some businesses are even accused of bypassing meters and connecting electricity illegally.

Johannesburg Chamber of Commerce and Industry (JCCI) chief executive‚ Joan Warburton-McBride‚ said that “owner-run companies like your smaller accounting firms” found a move to residential areas a haven away from commercial buildings whose occupants pay much heftier prices for electricity.

Warburton-McBride said‚ “since a year ago”‚ the chamber noticed that micro enterprises were making the move to Johannesburg suburbs whose advantage includes not having to pay a levy on the electricity charged to a commercial building.

She said none of its members had informed the chamber about any illegal activity involving connections to the city’s electricity network.

“If a business is connecting electricity illegally‚ they will not tell us. What we have noticed‚ however‚ is that since a year ago small businesses [owners] have been moving out of commercial buildings and into their own homes to pay lower electricity costs.

They realise that there is no business levy on residential property electricity. This is how they cope with the high price of electricity‚” said Warburton-McBride.

“It’s not just electricity [small businesses have to contend with] but all utilities across the board but definitely‚ electricity is the big cause.”

While the practice of connecting electricity is blamed largely on residential customers‚ City Power - the utility of the City of Johannesburg - confirms receiving an increasing number of reported incidents of illegal electricity connections by businesses.

In a report to the city council’s Municipal Public Accounts Committee (Mpac)‚ City Power says businesses “resort to bypassing meters due to high costs” of electricity which the utility admits has risen “by over 100%” in the last few years.

“With the increase of electricity costs in the past years by over 100%‚ City Power has noticed that customers resort to bypassing their meters so as to pay a reduced amount for electricity.

In the past‚ the trends were showing that most customers who bypass [meters] are residential customers. But in recent months‚ City Power’s corporate investigation has reported businesses who resort to bypassing meters due to high [electricity] costs‚” the utility reveals in documents to the public accounts committee.

“City Power is now installing protective structures and relocation of meters so as to prevent these actions from happening.”

Electricity meter-rigging in Johannesburg - in which luxury car dealerships‚ shopping centres‚ business complexes and a five-star hotel and spa have been implicated - has cost the city more than R200-million.

Working in collaboration with “corrupt City of Johannesburg officials who have access to the city’s water and electricity accounts”‚ business owners are able - assisted by a middleman with ties to city officials - to bypass the billing system and avoid paying for electricity.

Illegal electricity connections cost the city up to R1-billion annually in lost revenue.

- TMG Digital/The Times