LISTEN | Scrapping R200 electricity surcharge out of the question: Joburg MMC Dada Morero

The City of Johannesburg says scrapping the R200 prepaid electricity surcharge is not an option, but it is willing to review the price with a view to decreasing it by R50. However, this can only be implemented in January.

The municipality would have to find at least R80m to cover the shortfall should it decrease the amount to R150, said finance MMC Dada Morero.

The city was forced to introduce the surcharge to prepaid customers after Eskom withdrew the subsidy it previously offered to City Power, said Morero. 

“Scrapping is out of the question, because then you are crippling the municipality. The principle remains: all of us must pay for the services that we receive. And by buying electricity, it must be transported from one point to the other,” he said.

This surcharge goes towards building and maintaining the infrastructure that transports electricity from the power stations or substations to the customer’s home, and “that line that brings you electricity has to be paid for by someone”, he said.

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“Some years ago, there was some subsidy we used to get to help us with infrastructure. Now later, that thing fell off, so municipalities then started doing what is called a cost of supply study. So we did our own cost of supply study, which says we can then charge R200 for prepaid and we submitted that to Nersa.

“In fact, the earlier suggestion was about R500, but after thorough consultation during the budget process we said we can't burden our customers with R500 and we moved to R200, which was approved by Nersa as a reasonable availability charge.”

Morero, who also chairs the ANC’s greater Johannesburg region, said concerns were raised about the amount being too steep, even within his own party.

In January we will do the budget adjustment, and if we say, for example, the availability charge will go down by R50 to R150, we will then re-adjust our budget

—  Dada Morero, Joburg finance MMC

He said the city has committed to considering this, but the reviewed price, whether it is to reduce it by R50 or scrap it, which is unlikely, that can only be implemented in the adjustment budget scheduled for January 2025.

“So most parties, including the ANC, say maybe let’s enter a process of reviewal, in that process, our intention is ... probably to try to reduce it. But that decision, even if it can be effected today, that we are reducing the implementation, will only happen in January 2025 during the budget adjustment.

“So in January we will do the budget adjustment, and if we say, for example, the availability charge will go down by R50 to R150, we will then re-adjust our budget.”

Morero said his party told ActionSA, which put forward the scrapping of the surcharge as one of its conditions to support the ANC to install its mayor in the coming days, that this was not an option the municipality could consider without crippling its finances.

ActionSA agreed to support the ANC based on the agreed principle to review the price, he said.

There will be a reviewal with all the parties in council. However, if it is decided to implement a reduction in January, the municipality will still have to find the money, he added.

“For example, if we say we are reducing the surcharge by R50 to R150, we then have a shortfall in our budget. If it’s R50, a round reduction is probably about R70m to R80m. So we have to find answers to cover the shortfall. Electricity has become expensive, and for that matter, all of us must find better solutions.”