Electricity rates to soar as City of Joburg balances service delivery challenges

New infrastructure projects, a programme to address unreliable electricity supply, more houses and better public transport are the highlights of the City of Johannesburg’s new budget.

However, while the city’s member of the mayoral committee on finance, councillor Jolidee Matonga, was pleased with the budget he delivered on Tuesday, there was no getting away from the fact that life for most people in the city is going to become much more expensive.

“For the first time ever, the City of Joburg has managed to integrate its growth and development strategy into day-to-day operations,” Matonga said, before announcing plans, including the rollout of 1,000 free Wi-Fi hotspots across the city.

“The cries of Joburgers for affordable rates and taxes had been taken into consideration, with relief interventions and rebates for pensioners being put in place,” he said.

This was reflected in a new situation for pensioners with property valued below R2.5m and monthly income below R10,000 who will qualify for a 100% rebate on rates.

“Residents who pay their accounts regularly have asked for relief or benefit for their reliability. However, the fact is that our debt rehabilitation programme is not designed to catch people and attach their properties, but to afford amnesty for those who are more than 90 days in arrears,” Matonga said.

He said the city had to operate within a “constrained budget of approximately R73.3bn” and there was therefore no option but to increase costs for municipal services.

“Some of our large power users are moving off the grid so City Power is challenged going forward. We have been able to use increased tariffs to control the use of scarce resources such as water, but they still have to be kept affordable.”

The result of this balancing act is that property rates, which increased by 4% last year, will go up by only 2% this year.

The cost of electricity, increased by 6.2% in the last financial year, will go up by a whopping 14.59% in the new year.

“Electricity is going up by 14.59%, which is less than the 15.09% increase Nersa was granted.

“City Power used to be our cash cow, and we used income from that to cross-subsidise other projects. But they are in overdraft so we have come up with a turnaround strategy to deal with that,” said Matonga.

This included addressing the unreliable power supply experienced by many city regions and developing a programme for preventative maintenance and the electrification of informal settlements.

Matonga said concerns about budget cuts for the Hurst Hill substation, which supplies many suburbs hit by regular power outages, had been considered and R95m had been budgeted to upgrade the substation.

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