In addition to the 12.07% electricity tariff hike which kicks in this month, the start of the new municipal financial year, Buffalo City Metro residents face a new monthly electricity network and service charge of between R370 and R660.
The National Energy Regulator of South Africa (Nersa) has approved the city’s application to charge prepaid customers a “cost of supply” rate of R376 for infrastructure maintenance while credit metering account users will have their existing charge increased to R660.
This is because prepaid customers are on the cheapest available tariff plan, with no basic charge, the city says, and levying the charge will help bridge the fixed network operating cost gap.
Prepaid residential consumers do not contribute to the costs of repairing and maintaining the network.
On June 25, Nersa approved a 12.07% increase in the city’s electricity tariffs, with the basic charges to be implemented on accounts effective July 1.
The city initially applied to Nersa for a 15% tariff increase, but the energy regulator turned it down.
In the city’s budget, approved by the council on May 31, the city planned to increase basic charges for prepaid users, from zero to R465 but, according to metro spokesperson Samkelo Ngwenya, Nersa instead approved a monthly flat rate of R376.
The budget and the integrated development plan were approved by the council during a meeting boycotted by 38 of 39 opposition councillors after the city failed to hold public hearings.
Ngwenya said the city wanted postpaid or credit metering account users basic charge increased from R70 to R782, but Nersa insisted this charge be set at R660.
The metro also wanted small commercial users to see a basic charge increase from R108 to R1,283, but Nersa reduced the desired amount to R595 a month.
Indigent consumers will not be affected.
Such disproportionate increases underscore the blatant disregard and lack of empathy the governing party [ANC] has for residents
— Siphiwo Tshemese, ActionSA BCM regional chair
These charges will reflect on consumer accounts regardless of whether electricity is used, a move met with disgust by many consumers and ratepayers.
City manager Mxolisi Yawa said the increases came after the metro conducted a cost of supply (COS) study on applied electricity charges, “subsequent to the multiyear price determination formula being set aside by the high court as a basis for tariff increases”.
“The concluded COS study report indicates tariffs are under cost reflective by 16.9%. However, BCM has agreed with Nersa not to implement the full cost of reflective proposed tariffs in one calendar year but to spread this over two financial years,” Yawa said.
Ngwenya said: “Our COS study indicated that overall, electricity tariffs were under cost reflective by about 16.9%, meaning we are incurring losses of R300m a year from technical losses. Unfortunately, electricity tariffs have had to go up for the 2024/2025 financial period ... Otherwise, we will be running a city that will go to ground.”
Several stakeholders described the increases as outrageous. ActionSA BCM regional chair Siphiwo Tshemese said his party was outraged at the huge tariff increases unilaterally imposed on residents.
“Such disproportionate increases underscore the blatant disregard and lack of empathy the governing party [ANC] has for residents,” Tshemese said. “These severe increases will have a far-reaching impact.”
People in the metro were already under financial strain, Tshemese said, “and such callous increases will no doubt result in further hardship and see more people being pushed further into poverty.
“We further oppose the manner in which these increases were introduced, particularly highlighting, first, a lack of public participation and, second, the surreptitious manner in which the budget was pushed through the council without allowing due process and engagement by opposition parties.”
Border Kei Chamber of Business director Lizelle Maurice said the metro did not value the business sector or its residents: “We were not consulted on this ... It is unacceptable. It will result in more job losses.”
Ratepayers were outraged. The Gonubie Ratepayers’ Association’s Henri Smit said: “They are milking the public. They are trying to get rich quick out of the poor people, because we are already paying the most expensive rates in the country and they want to add an additional top-up. It’s outrageous.
“We have a ratepayers’ meeting next week and the question will be brought up there. We need to take action against BCM because it’s ludicrous.”
Community activist and National Community Dialogues chair Leonard Ncumbese lambasted BCM for its “lax consulting”.
“BCM is the most expensive metro in South Africa when it comes to tariffs. They are killing its residents.”
DA councillor Geoff Walton said the service charges were large and the reason was “almost certainly to deal with the deficit on the electricity account which now sits at over R700m.
“Consumers are struggling to pay for rates and services. These increased fees will add to their burden. This serves to prejudice consumers who do not use a lot of electricity, who seek to economise on use, or who cannot afford to pay a lot and are forced to curtail their consumption.”
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