Ekurhuleni, Joburg want tariff increases of up to 11%

Two of the country’s largest metros are proposing tariff increases for its utilities of around 10%. The City of Ekurhuleni wants to increase the prices of water and sanitation by 11% for the 2022/23 period which begins on July 1. The City of Joburg has proposed increases of 9.75%, very close to 10%, for the same two services.

Both metros want to increase the tariffs charged on electricity by 9.61%.

Municipalities say this is in line with the Eskom tariff increase approved by regulator Nersa at the end of February (Eskom supplies bulk power to municipalities).

Strangely, Nersa published a discussion document on its website at the beginning of this month where it proposes “an average increase of 7.47% in municipal electricity tariffs from July 1”.

Read: Nersa proposes 7.47% increase in municipal tariffs

The electricity tariff increases need to be approved by the regulator before July.

* New valuation rolls in place

** For businesses: water 9%, 7.9% for refuse, 9% for sanitation

It must be noted, as the City of Cape Town does in its draft budget, that “the proposed tariff increases … are averages, i.e. some ratepayers and service users may pay more and others less than the average as a result of the impact of rebates, usage/consumption, property value and type of consumer”.

The City of Ekurhuleni says: “Rand Water [has] indicated a tariff increase of 8.0%. A tariff increase of 11% is proposed to cater for the cost of doing business, such as water reticulation and overhead costs.”

It says it implemented a new valuation roll from July 1 2021 and that “the objection and appeal process is still in progress and will conclude on April 29 2022″.

“In order the shield ratepayers from the impact of the new, it is proposed that the base rates not be increased during the 2022-23 financial year.”

City of Joburg

The City of Joburg says its proposed electricity tariff increase will result in 9.7% higher service revenue from this source due to its “strategic drive to reduce total electricity losses to a level of 21% in the 2022/23 financial year and turnaround strategy programmes to enhance revenue and profitability of the company”.

It notes that the “average bulk purchase price increase from City Power’s main suppliers (Eskom, Kelvin, Ekurhuleni and Mogale Municipalities) is assumed at 9.2%”.

Read:
Joburg property rates are way lower than Durban’s
Total municipal charges compared across major metro
Joburg has the cheapest water, Durban the priciest among metros

The metro says its water tariff increase “is based on an average tariff increase of 9.75%, based on a proposed Rand Water tariff increase of 8.8% and an estimated population growth increase of 0.95%”.

Tshwane

Tshwane is proposing the largest increase in property rates, being 6%. More than 21% of the metro’s operating revenue will come from this source. The metro says the 9% increases for both electricity and water are justified by the increase in the prices of bulk purchases by the metro.

eThekwini (Durban)

eThekwini also has a new valuation roll.

It says “there is no proposed property rate increase for residential rates and the City is happy to announce that the rate randage on residential properties has been decreased by 10%” due to the implementation of the new roll.

It has extended the objection period for the new roll to the end of this month.

This is the only metro to specify average increases for residential properties and for businesses in its summary of changes. Proposed business tariff increases are significantly higher than those for residential properties.

Mother City

In its draft budget, the City of Cape Town says: “Nersa approved an average percentage price increase of 9.61% to Eskom for the 2022/23 financial year. This increase translates to an 8.61% increase for municipalities, which in turn translates into a 9.5% average increase for City supplied consumers.”

It says this increase is required because of the “bulk purchases increase, other required expenditure items and a reduction in sales volumes of 1.5% on a restated sales base for 2021/22”.

Read: Electricity: Who pays more?

The Mother City says the “increase on property rates revenue income was kept at 4.87%”.

This “translates into a 5.2% increase in the rate-in-the-rand for residential properties” and adds that “no organic growth is projected for property rates for 2022/23 as a result of numerous factors including the limited ability of the construction industry to respond to development needs after a further 12% contraction in 2021 and a 20% contraction in the 2020 financial year”.

All metros are conducting consultations with residents this month and final budgets are to be tabled by June, for implementation from July 1.