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{Extracted from CityNews April 2010} The proposed new tariffs and service charges are set out in the draft budget. Water and sanitation charges will increase in line with inflation. However, electricity tariffs have risen sharply due to the Eskom increases, and solid waste removal charges have also risen to pay for new landfill and transfer station infrastructure.
Water and sanitation charges will increase in line with inflation, and property rates increases are in some cases below inflation. However, electricity tariffs have increased sharply due to the City being obliged to pass on the tariff increases granted to Eskom by the National Energy Regulator. Solid waste removal charges have risen to pay for new landfill and waste transfer station infrastructure.
The proposed service charge increases, given in the tables are: • The property rate has dropped to 0,531 cents in the rand • An average increase of 10% for water and sanitation • An increase of 18% for solid waste removal • An increase of 38,5% for solid waste disposal • An average increase of 24,6% for electricity, based on Eskom’s increase of 28,9% for this year • The first R200 000 of your property’s value is rates-free.
Water and sanitation tariffs Please note that the City has increased the number of billing categories, or ‘steps’, for water and sanitation. These new steps are better suited to the volumes people actually use. The first ‘Step 1’ – the free basic allocation – remains unchanged, but bigger volumes have been allocated into smaller blocks. The tariffs proposed in the budget relate to the new steps shown alongside.
Solid waste tariffs There is a new charge, for ‘clean’ builder’s rubble.
Electricity tariffs
These remain in three broad categories: ‘Lifeline’ – which caters for poorer people and has no service charge, ‘Domestic Low’ – with no service charge, and ‘Domestic High’ – which does have a service charge.
Examples of actual costs in each of the categories are given in the tables alongside.
How the electricity tariffs work The tables below show what customers can expect to pay for electricity at the proposed new tariffs, and the examples explain what portion of purchases is made up of the free allocation, at the subsidised rate and at the normal rate.
Examples at the LIFELINE energy rate • Person A buys R240 (including VAT) worth of electricity once per month. For each purchase, he will receive 366,3 kWh, made up of 50 kWh free, 100 kWh at the subsidised rate, and 216,3 kWh at the normal rate. • Person B buys R60 (including VAT) once a week. For the first purchase in the month he will receive 50 kWh free, and 90,6 kWh at the subsidised rate – a total of 140,6 kWh. On his second purchase he will receive 9,4 kWh at the subsidised rate and 66.9 kWh at the normal rate – a total of 76,3 kWh. For the third and fourth purchase of the month he will receive 74,7 kWh – all at the normal rate. If one adds all four purchases together, he also receives 366,3 kWh in the month, the same as Person A. • Person C normally buys R200 (including VAT) once a month. For this he will receive 316,5 kWh made up of 50 kWh free, 100 kWh at the subsidised rate, and 166,5 kWh at the normal rate. However, in this particular month, Person C requires a small top-up amount and buys R40 worth of electricity. Person C will receive 60,4 kWh for this purchase – charged at the normal rate – bringing the total energy purchased in the month to R240 – 366,3 kWh in total. Examples at the DOMESTIC LOW energy rate This tariff is relatively simple. Whatever energy is purchased, the tariff remains the same and the value is a simple multiplication of tariff x units (kWh) purchased.
Examples at the DOMESTIC HIGH energy rate • Person D buys 500 kWh of electricity four times a month. His normal account will contain two components: an energy charge to the amount of R455,85 and a service charge of around R52,50 for the week (seven days are used here – actual value will depend on the exact length of time between purchases). Both of the purchases in the month (if equally spaced) will be identical. • Person E buys 2 000 kWh of electricity on the first of the month, resulting in an energy charge of R1 823,40, and a service charge of either R225 (for a 30-day month) or R232,50 (for a 31-day month). • Person F buys electricity once a year. He uses 24 000 kWh in the year, and will therefore pay R21 880,80 for energy for the year. He will also pay the service charge for 365 days, which will total R2 737,50 for the year. Please note that the service fee is a daily fee and works out to be the same amount over a year, whether you buy once a week, once a month, or once a year.
• For more information, contact the City’s call centre on 0860 103 089.
I’ve had many questions about the annual Eskom electricity price increases after my article on “Saving 24.8% by loading your pre-payment electricity meter”. Read that article for the intro to saving and calculating your energy usage using the calculator.
This article attempts to answer the many FAQs – I’m happy to say that Aden Thomas from Cape Talk recently had an interview with Neil Ballantyne Head: Revenue Protection, electricity services at the City of Cape Town.
Click to play the PodCast:
Or, here’s a transcript of that interview:
Aden: So, Eskom prices for electricity those increase as of tomorrow (01 April 2010), and people supplied by the City of Cape Town, their tariffs increase of the 1st of July 2010. I undertook yesterday just on the back of so much confusion to get somebody up on air to explain some things to us. So, Neil Ballantyne is the person that the City has identified to speak, Head of Revenue Protection, Electricity Services at The City of Cape Town joins me on the line now. Very good morning to you Neil, thanks so much for your time. Neil: It’s a pleasure Aden, good morning.
Aden: Let’s start out. Many, and just confirm for me – if your electricity is supplied by the City of Cape Town your increase will only kick in on the 1st of July. Please confirm that before we go anywhere else. Neil: That is correct – the 1st of July every year is the date that the new tariffs kick in.
Aden: And I know that you’re not a tariff expert but a meeting is meant to be convened today where the tariff increases are to be finalised for the City so in any case we can’t talk of the rate of increase because it’s not yet been determined. Neil: Ja, that’s right Aden – the Council sits today and then after today, once the tariffs have been approved from the 1st July we’ll go out for a public comment period and everybody will be able to have their say as to what they think about the tariff increase. Aden: OK, so there’s still a public participation process beyond that. Neil: Correct.
Aden: How would one determine (and I had loads of people asking yesterday, and I wasn’t able to give a definitive answer because I don’t think just on the face of it you are able to say well this neighbourhood and that neighbourhood – but still some confusion among electricity users about who supplies their electricity. There are those in the City who get their power or their electricity from Eskom then there are those who get their electricity, well from Eskom but through the City of Cape Town. So they are the ones who are either buying it from the City on a pre-paid basis or are getting it as part of a monthly bill that is sent to them). So how would one determine – just before we go any further – whether or not we are Eskom supplied or City of Cape Town supplied? Neil: Aden, basically you should be able to tell from your electricity account whether it’s coming from Eskom or the City – that will determine who your supplier is. And if you are getting pre-payment – I know that some of the coupons don’t actually state whether it’s Eskom or the City, but roughly from half way through Milnerton southwards, down Vanguard Drive, Mitchell’s Plain, the whole of the Cape Peninsula is City supplied. If you take the strip out along Voortrekker Road from Goodwood, right out through Parow, Bellville, and all those areas Durbanville, Kuil’s River, Kraaifontein, Somerset West, Strand, Gordon’s Bay… all those areas are City supplied. Then, going northwards from sort of half of Milnerton, Parklands, Tableview, Melkbos – those areas are all Eskom supplied – excluding Atlantis which is City supplied. Then we’ve got bits and pieces in the middle supplied by Eskom: Elsie’s River, Blue Downs, Delft. But if people have access to the Internet they can go onto the City’s web site www.capetown.gov.za click on “Services and Departments”, click on “Electricity” then click on “Load shedding” – that is where we have all our load shedding schedules. But on that site there’s a very nice map that shows all the Council supplied areas in colour, and all the grey areas on those 3 maps (there’s one for North and one for South and one for East) – all the grey areas are supplied by Eskom. So that should give people a good idea – and the suburb names are there as well. Aden: Ah fabulous! Neil: What I’ll do is that I’ll email your producers the link and maybe you can put it on your web site. Aden: There we go – that’s the one. And so often people say “we don’t have the Internet” – your local library has the Internet, so go along there. I mean it’s free of charge and you can go along and check it in that way.
So, now we’ve determined or not whether we’re Eskom or City supplied – many of us are wanting to stockpile. They are saying “you know what, if we’re looking at 25% or 30% increases, depending on what gets decided, I’d rather buy a lot of electricity at the cheap price – so basically, I’m investing in cheaper electricity going forward. Is that kind of thing advisable from somebody with your experience, and what could some of the pitfalls potentially be to doing that kind of thing? Neil: OK, firstly, from a financial point of view, obviously if there is going to be an increase in all the tariffs which there is likely to be in the Cape Town area, it makes financial sense. There is however a small risk – one must understand that if you are going to put all those units into your meter, and your meter fails catastrophically, so that we cannot access the memory in that meter to extract what you have loaded into it, then basically you are going to lose those units. But I must say that less than 5% of cases we are unable to retrieve that credit. Aden: So there is a small chance of complete melt-down and that’s it – it’s gone for good. Neil: Ja, well we might be able to make a small plan and compensate you in a certain way, but maybe not in the full extent. Looking at your purchase history and that sort of thing. Other reasons – you know, if you move house, and you’ve got thousands of units in your meter – there are no refunds – the electricity supply by-law states that we do not give refunds once you’ve bought the electricity – so that’s another down side of pre-buying – but if you know that you are not going to move, well then, there’s no problem with that one. The other thing that you’ve got to watch is that if you buy more than an annual usage for the tariff group that you are on, when we do our checks – we normally do it annually, but sometimes more often – we look back 12 months and work out the average monthly consumption, and then we put you into the category which is indicated by that monthly consumption. So if you are buying a huge amount of electricity and you are on the low domestic low tariff and your purchases put you into the domestic high tariff, then we will put you into the domestic high tariff rate… and then in 12 months time, we will do the check again so people must not buy more than the annual usage for that tariff rate that they are on. Aden: And those details would also be on the web site? – I’m not about to run through the details of each of the categories – but could people for instance know which the limits are for ‘lifeline’, ‘domestic low’ and ‘domestic high’ by going to your web site? Neil: If they go to the web site under “Electricity Tariffs” those are clearly stated there and of course, when we advertise the new tariffs, we will advertise the ranges as well.
Aden: OK, how can one migrate – as it were – let’s say I was a ‘domestic high’ user. Perhaps it’s in my best interest to try and pay a reduced tariff for my electricity – I’m going to be a lot more frugal in my consumption going forward – could I make application to the City to say please convert me to the ‘Domestic low’ category? Neil: Yes Aden, we can move people freely from ‘domestic high’ to ‘domestic low’ at their wishes. Obviously, the ‘domestic lifeline’ tariff which includes the ‘free’ you have to qualify by consumption because you can’t just request the ‘lifeline’ and then get your free if you are using more than the purchase limit of 400 units per month. So, from high to low: no problem; but you have to qualify and the qualification is an average consumption looking back over the last 12 months of purchases of less than 400 units. So that is the criteria for the ‘lifeline’ tariff.
Aden: And the 12 month assessment – does that happen over a calendar year? So would I, as of the 31st of December with the year in review, would I then be considered to be ‘domestic low’, ‘domestic high’, and so on… Is it done on a staggered basis across the City over a 12 month period? How does that work? Because many would look and say well, could I not potentially jeopardise myself by stockpiling electricity and using it in that way? Could I not then be seen to be a ‘domestic high’ user because I’ve bought a whole lot of it? Neil: That’s exactly what will happen. Generally, in July we do this check and look back over the past 12 months. But we are intending (especially on the pre-payment system) to do it more often – maybe twice or 3 times a year – looking back 12 months from the time that we do it, and adjust the people. Because it is in the consumers’ benefit to be on the correct tariff because they will save – it’s no good being on the high consumption tariff and you’re using 600 units per month – you will be paying more than you should for your electricity so we are trying to be pro-active and assist the consumer in saving money that way.
Aden: Perhaps a difficult one to answer, and I’m not too sure if there’s any easy way of trying to resolve this – and I’ve had this as feedback quite often: it’s almost punitive against larger families – the tariff structure: You could have 7 people (a Mom and a Dad and a few kids, and Granny and Grandpa who might live in a flatlet on the property) who are doing their best to be wise about how they consume electricity but because they are consuming a lot of it, they end up paying more. You could have 1 or 2 people living in a place who are wasteful in their usage of electricity, but because they use substantially less, they end up paying less per unit. Is there any way of trying to resolve that debate? Neil: Aden, that is difficult because we don’t know what the situation is in each house. But I must say that if you have got a large household and you are using a large amount of electricity and you are on the ‘domestic high’ rate you are actually paying less than you would have paid had you been on the domestic low rate because there is a cross-over currently at 800 units and after 800 units, the ‘domestic low’ rate becomes more expensive than the ‘domestic high’ rate. So, although you are paying a service charge and a lower energy charge and using 1,000 units, you are paying less than you would have paid had you been on the ‘domestic low’ rate.
Aden: OK, final one: many people who bulk-buy, so they spend 3 or 4 thousand Rands – I’ve had people phone through in times gone by saying “I’m buying 10,000 Rands worth of electricity” – at the point at which that is finally exhausted and you next purchase – whatever the outstanding service fee is for the all the months that you haven’t paid it, you next payment would then go towards settling that first and with whatever the balance is, you can then buy units – am I correct in understanding that? Neil: That is correct. Basically, the service charge is paid in arrears. So the vending system looks back to see when you last purchased and they multiply the number of days times the service charge, which is a daily rate – and that amount of service fee is taken off the amount you are tendering before you get electricity. My suggestion to people who are on the high consumption tariff – if you bulk buy – just go and buy a little bit every month so that you clear your service charge on a monthly basis, so when you do come and bulk buy for the next increase (if that’s how you want to run your electricity purchases) you are not then surprised by this huge service fee. In effect, it doesn’t make any difference – you are still paying the same amount – whether you buy daily or once a year – you still pay the same service fee per annum. So you are not saving money, it’s just that you are not getting that shock of the service fee “eating "up” all the money that you want to use to pay for electricity.
Aden: There we go, Neil Ballantyne and it might be worth getting him on the air again with us at some point in the future - Neil Ballantyne who is with Revenue Protection Services with the Electricity Department within the City of Cape Town. Most enlightening – pardon the pun!
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