Joburg’s prepaid users in for a shock

Joburg households and businesses using prepaid electricity are in for a shock if the fixed charges proposed in the city’s draft budget are approved.

It was tabled on Friday and stakeholders have until 23 June to comment.

The City of Joburg proposes a new R200 basic charge for prepaid residential customers and R400 for prepaid business customers.

That is over and above the increases to existing charges per kilowatt-hour (kWh) used, which are way above the current inflation rate. The proposal is for an 8.1% increase for residential prepaid and 5.8% for business.

In addition, the lowest tariff block for residential prepaid customers would be reduced by 50kWh to 300kWh, meaning that higher tariff blocks will be reached earlier in the month.

This means a household that uses 374 units a month will go from paying R527 to R780 per month, excluding VAT, from 1 July if the proposal is accepted – an increase of almost 50%.

This is not properly disclosed in the document published for public comment because, in calculating the average increase per user group, only the increase in charges per kWh used is taken into account.

The city tried to introduce the R200 basic charge for prepaid residential users last year, without even including it in the draft budget, but scrapped the fee after Moneyweb disclosed it.

According to a report to the mayoral committee dated 20 March that Moneyweb has seen, the new charges are aimed at closing the gap between prepaid and conventional users.

It states: “The residential prepaid customer currently does not make [an adequate] contribution to the cost of operating and maintaining the electricity infrastructure to ensure its availability on demand. It is therefore proposed to introduce a capacity charge of R200/m for all residential prepaid customers.” (sic)

If the city gets its way, it will increasingly be closing the gap between residential prepaid and conventional users over the next three years.

Residential users who have been buying electricity on credit are currently paying fixed charges of R527 per month. The city proposes increasing this to R757, in itself a 43% increase. In its budget document, the city also understates the proposed tariff increase for conventional users at 8.1% by excluding the fixed charges from the calculation.

The introduction of the R400 basic charge for prepaid business customers is also aimed at closing the gap between them and conventional users. In the report to the mayoral committee it is proposed that this be increased by a further R400 next year. – Moneyweb