Electricity price relief for Tshwane

Image courtesy stock.xchnge

Image courtesy stock.xchnge

The National Energy Regulator (Nersa) has shown some mercy to business owners in Tshwane by disallowing an average municipal tariff increase of 12% for commercial customers and between 13% and 16% for bulk commercial and industrial customers.

Nersa only approved a tariff increase of 8% for these customers. This reduces the average percentage increase for all Tshwane customers to the guideline of 7.39% and leaves the local authority with a budget shortfall of R150 million.

The revised tariffs have to be approved at a special council meeting scheduled for Wednesday. It should have taken effect on July 1 and Tshwane will have to apply it retrospectively.

Business earlier reported that the Tshwane council on May 30 approved an average electricity tariff increase of 8% after an extensive public participation process. In a surprising and unexplained move, it presented an application for a 9.2% average increase at public hearings hosted by Nersa.

Lex Middelberg, councillor for the opposition DA responded by telling Nersa at the hearings the application was unauthorised.

During hearings, Tshwane argued its tariffs for commercial and industrial customers were below the benchmark and a bigger increase was not warranted. Regulator member Thembani Bukula challenged the wisdom of trying to close the gap in a single year.

Bukula also pointed out the Tshwane application indicated the city would show a surplus from electricity collections, which raised questions about the huge increase. Ndivhuwo Lithole, Tshwane deputy director for rates and revenue protection, who made the representation, said the information in the application was wrong and the city actually showed a loss on electricity.

Middelberg drew attention to growth in Tshwane’s consumer debt in 2012/13 and electricity distribution losses of R623 million that year. He also pointed out the city was planning for a total surplus of R1 billion and said it would therefore be unfair to punish consumers with high tariff increases.

According to the budget approved on 30 May, electricity tariffs were expected to generate R9.6 billion in revenue in 2014/15, if an average increase of 8% was approved. That was 10.3% more than in 2013/14. In a report to councillors to be served today, the chief financial officer says Tshwane will raise R150 million less than initially expected, owing to the lower tariff increase.

The report states the Services Infrastructure Department will ensure the shortfall is covered by increased credit control and minimising nontechnical losses, a term that mostly refers to electricity theft. If, after the first quarter, it may not realise the savings, it should notify the financial department to make amendments.




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