Johannesburg residents don’t pay more, says utility

City Power in Johannesburg has denied that residents who were billed monthly paid the most for electricity among the major metros, saying it was not possible to compare the tariff structures of municipalities.

According to spokesperson Isaac Mangena, municipalities used varying revenue collection models.

“City Power has noted a misleading article, appearing first on Moneyweb, comparing the city’s rates to those of other municipalities,” said Mangena.

“The publication states that the tariff structure across municipalities are so different that they ‘are almost entirely not comparable’. This is why the publication’s conclusion that Johannesburg is more expensive than other metros is without foundation,” he explained.

According to the article, Joburg residents who were billed monthly paid the most for electricity among the major metros in South Africa and this was due to two fixed monthly charges – a network charge and capacity charge, which together total R631.16, including

VAT, per month.

“While other municipalities base their revenue recovery primarily on consumption,

City Power’s revenue recovery model is aligned to a fixed cost structure of electricity operations, guaranteeing the availability of power while ensuring that as consumption increases, the unit price of electricity for the consumer drops,” said Mangena.

He said the fixed charges ensured that the entity was able to recover necessary revenue to cover the cost incurred in ensuring availability of electricity supply on demand. Mangena said, as power consumption increased for residents, the unit cost became less.

“For example, Ekurhuleni’s tariff A (residential) charges R6.06 per kWh for consumption levels above 700kWh. This is compared to our highest residential conventional block which ranges between R1.53 and R1.82 for similar consumption levels.”

“In other words, should Ekurhuleni tariff A customer for whatever reason not consume any electricity in a particular month, the metro will not recover any revenue, while incurring costs to ensure availability of electricity on demand,” he said.

“This means the cost of operating the electricity network is essentially fixed, i.e. City Power has to operate and maintain the electricity network, even when the customer is drawing very little or no electricity at all, to make sure that electricity is available on demand.”

Tariff structures across the various metros showed that those which charge different rates depending on levels of usage (so-called inclining block tariffs) don’t use the same sized blocks.

Some have flat-rated tariffs. Others, like Tshwane, were shown to bill seasonally with different rates for summer and winter.

Cost of operating the network is essentially fixed