Regulator curtails BCM’s tariff hike

BUFFALO City Metro’s hopes of milking an extra R831 272 from its ratepayers by hiking all electricity tariffs have failed.

The National Energy Regulator of South Africa (Nersa) refused to approve the metro’s request to increase the tariffs by 1.88% for the current financial year for domestic credit meters and large power users.

The hikes were contained in reports filed to a council meeting in May by BCM mayor Xola Pakati.

They were tabled as part of the 2017-18 integrated development plan (IDP) review, medium-term revenue and expenditure framework (MTREF) and built environment performance plan (BEPP) reports.

Council approved the new tariffs hikes.

During the announcement, Pakati said water and electricity losses remained a concern in the metro.

He said: “For water service the tariff increases are projected at 9%, 8.1% and 8% over the 2017-18 MTREF period respectively.”

With regards to electricity, he said an increase of “1.88% was proposed over the MTREF period in line with the Nersa guideline”.

However, a report tabled in council by city manager Andile Sihlahla on August 25 revealed that Nersa did not approve the 1.88% increase proposal, but instead approved increases below those put forward by BCM for the domestic credit metering and large power users increases.

“This resulted in an estimated annual reduction in revenue amount to R811 604,” said Sihlahla.

“Nersa’s approval of large power users tariff is below BCM’s application. This resulted is an estimated annual reduction in revenue amounting to R19 668.”

He said the estimated revenue loss was R831 272.

In a letter sent in June to BCM, Nersa’s chief executive officer Chris Forlee said among the functions the regulator was entrusted to perform, was to review and approve tariff increase proposals by all licenced distributors of electricity.

Forlee wrote that in a meeting in April, the regulator approved the guideline increase of 1.88% for municipalities for the current financial year, but during its application BCM received an approval less than what they had applied for for the domestic credit metering and large power users.

According to BCM’s website, in the last financial year ratepayers paid:

● R1.9172 per kilowatt hour (kWh) for domestic credit metering and this year, after the Nersa approval, the same unit will cost users R1.9364 including VAT;

● Prepaid metering customers using domestic and commercial electricity paid R1.9172/kWh last year and now this year will pay R1.9533/kWh after VAT; and

● In prepayment metering, large power users (80 kilovolt-ampere up to 150kVA commercial and industrial) paid R2.2173 a unit last financial year and will pay R2.2395/kWh this year.

Forlee further instructed BCM to submit a progress report on curbing high electricity losses by the end of this month.

East London Ratepayers’ Association secretary Christo Theart said: “BCM uses the electricity revenue as a milking cow . . . They still have one of the most expensive electricity prices in the whole country.

“A few years ago they insisted on implementing rates that were higher than what Nersa had approved and later had to repay all ratepayers.”

BCM spokesman Samkelo Ngwenya said: “The revenue will decrease by R831 272, but the associated operating expenditure will also decrease by R831 272.

“BCM is permitted in terms of the MFMA (Municipal Finance Managment Act) to adjust its original budget.

“BCM will table both the revenue decrease and associated expenditure decrease during the mid-year adjustment budget.”