Tariffs are revenue neutral and no profit is planned on this income

WE thank Mr S Kramer for his letter (The Cape Argus, May 4, 2022).

In theory it is correct that a fully cost reflective energy service charge should not increase at the same rate as the energy usage charge, but at the rate at which the fixed costs incurred in rendering the service increase (note: some of these costs would be inflation linked, but not all of them).

However, the Home User Service Charge is not fully cost reflective as it is only approximately half of what it should be.

Thus, by increasing it at the same rate as the energy usage charge, it is slowly being brought to the level at which it should actually be to cover the cost of service provision.

This is important because the income from rates and tariffs all goes toward paying for the provision of reliable services and meeting the needs of a growing city.

Tariffs are revenue neutral and no profit is planned on this income.

As regards water, it must be emphasised indigent residents do not receive “unlimited free water”.

In the advertisement on the City’s rates and tariffs it is specified that indigent properties receive a basic monthly allocation of 15kl of water and 10.5kl of sanitation.

During the 2021/22 financial year, the City introduced an approach whereby the flow of water to a property is restricted where “Excessive Use” occurs.

This measure was implemented to ensure that customers from indigent properties manage their consumption responsibly.

The City has among the lowest rates and tariffs of metros in South Africa and it spares no effort in trying to keep service charges as affordable as possible.

COUNCILLOR SISEKO MBANDEZI | Mayoral Committee Member for Finance City of Cape Town