Double the price for Joburg prepaid electricity? Here's what you should know

Johannesburg's electricity prices could see a major hike if the proposed tariffs by the city for 2020/21 are accepted.

The hike could result in households and businesses paying double for prepaid electricity.  

The proposed rates are at the public consultation stage and stakeholders have until June 23 to comment.

Here is what you need to know:

Proposed rates

Johannesburg last week published its draft electricity tariffs for the 2020/2021 financial year.

The proposed changes are to increase prepaid charges for both residential and business customers by 8.1% - as well as an additional monthly payment of R200 and R400 respectively.

“All service and capacity monthly charges across all customer categories are proposed to be increased by 8.1%," said the city.

“The proposed increase to service and capacity charge is aimed at achieving greater balance between City Power’s revenue and cost structure by gradually increasing the contribution with a fixed income to more effectively compensate for the proportionally higher fixed cost structure of our operations.”

Increase for businesses

The city said businesses will see a tariff increase of 5.8% to gradually align with the benchmark tariffs of the National Energy Regulator of SA (Nersa). 

“It is also proposed for residential and business prepaid customers to start making an appropriate contribution to the cost of operating and maintaining the City Power electricity distribution network to be available on demand,” said the city.

“It is proposed to introduce a capacity charge of R200 for residential customers and a R400 for business prepaid customers. It is envisaged that the particular customer categories will fully align to respective comparative tariffs over a three-year tariff journey.”

Reductions 

In addition to the hike, the city proposed to reduce the kilowatts for prepaid tariffs.

The city will reduce the size of blocks in the following manner:

• block 1 to be reduced to 0-300kWh from 350kWh;
• block 2 to be reduced to 301-500kWh from 351-500kWh; and
• block 3 to remain at all consumption greater than 500kWh

This means that block 1 using prepaid meters will pay higher tariffs once they reach the first step of 300kWh.

“The current residential prepaid tariff is still significantly lower when compared to residential conventional 60A tariff. In order to [achieve] better alignment between the two tariff categories, it is proposed to further review the structure of the residential prepaid tariff as well as to introduce a fixed monthly capacity charge.” 

Three-year plan 

The city plans to increase electricity prices for the next three years to align with residential rates.

“It is expected for the tariff differential between the residential prepaid customer to be eliminated over the next three years by gradually increasing to the residential prepaid capacity charge over the next three years,” said the city.

“The proposed changes in the prepaid tariff structure will further reduce the difference between the two customer categories at a consumption level of 1,200kWh per month.

“The proposed introduction of R200/month capacity charge to residential prepaid customers will almost eliminate potential negative revenue impact due to high-usage customer migration to the residential prepaid tariff at consumption levels of 1,200kWh/m.”

'The charge is not that high'

Speaking on  702 talk radio, city spokesperson Nthatisi Modingoane said the charge was not that high compared with the current amounts paid by conventional meter users.

“What the city is trying to do is normalise the situation and say everybody should contribute to the maintenance and upkeep of the infrastructure because its routine maintenance is costly,” he said.

Modingoane said the costs were proposed because of a “gap in terms of the money that becomes available to maintain infrastructure”. 

“We are not saying what we are proposing will eventually be the final tariffs or would get approved by council at the end of the month. We're saying there is a gap in terms of the money that becomes available to maintain the infrastructure because more people are moving away from conventional to prepaid.”