The National Energy Regulator of South Africa (Nersa) has concluded its inquiry into the City of Cape Town’s electricity tariff structure and price increases. Nersa had received numerous complaints regarding the City’s tariff structure and electricity prices from several parties and after months of consistent requests and complaints by the Stop CoCT action group, Nersa decided to launch an inquiry into the matter.
However, despite the conclusion of the inquiry, complainants have not received much joy.
“Basically, Nersa’s response was as follows: they did look into the tariff setting at the CoCT and they do acknowledge that the actual rand values the City is charging the public are higher than what is set on the Nersa website. However, the City, as well as Nersa are putting forward the actual percentage increase which was 8.88 percent…So as far as that is concerned, the City did apply Nersa’s percentage increase,” explained the founder of action group Stop CoCT, Sandra Dickson.
“As far as the rand values are concerned, however, Nersa acknowledges the City is higher. Our research shows that the City of Cape Town is one of the only municipalities in the entire country that has such a discrepancy with Nersa tariffs.”
While Dickson argues that the City is making unreasonable profits from the electricity pricing structures, she says that the City is disingenuously claiming that they do not make a profit.
“Stop CoCT is not going to leave any stone unturned in challenging the City and getting the tariffs corrected retrospectively,” said Dickson.
“The City claims they are not making a profit, but if we look inside their financial statements we see handsome surpluses – surpluses which have diminished over the last few years due to the pressure put on them. Everywhere you read, everybody says the main sources of income for a municipality are water and electricity tariffs. What the City has done, which Nersa then undertook to look into further, is the charging of surcharges.”
Surcharges have, according to Dickson, been the means by which the City has bypassed Nersa regulations in pursuit of greater profits. Dickson indicated that Nersa cited the Municipal Fiscal Powers and Functions Act and that the energy regulator says they are powerless as the surcharges are not under their jurisdiction.
“According to the information we got from Nersa…the difference in rand value is attributed to the City charging a surcharge on top of the Nersa approved tariff,” said Dickson.
“How can a local bylaw trump the national laws? As far back as in 2010 the City started to use this loophole where Nersa is not totally in control of the tariffs.”
Dickson urges the public to engage in public participation processes and to ensure that local government adheres to public demands. Dickson suspects that while the City calls for public participation, it ignores such participation when decisions are finalised.