Inside Cape Town’s quiet battle to charge extra for electricity
10 April 2024
Since July 2022 the City of Cape Town has accumulated hundreds of millions of Rands in profits from its scheme to force consumers to pay more for electricity than they should according to national regulation.
Cape Town implemented a 9.6% tariff increase for 2022/2023 (compared to the 7.47% increase approved by the regulator, NERSA) and for 2023/2024 it implemented a 17.6% hike compared to the approved 15.1%.
For the past two years the City has been quietly litigating, at ratepayers’ expense, against NERSA for court permission to ignore the nationally regulated tariff. In other words, consumers are funding the City’s case to be able to charge them extra!
The amount of money that the City is over-charging residents amounts to hundreds of millions of Rands. Defending itself in a rare statement on the subject last year, the City suggested that complying with NERSA’s tariff for 2023/2024 would create a R500m shortfall.
Should the City lose its court battle against NERSA this money would have to be refunded to consumers. On top of the previous year’s over-charges.
It’s no wonder the DA-led City has been trying to keep a low profile on the matter. To fill the information void, GOOD Party MP Brett Herron asked the Minister of Mineral Resources and Energy, under whose jurisdiction NERSA falls, for some insight.
According to Minister Gwede Mantashe’s written response, the matter is presently awaiting judicial management to determine a hearing date.
The City had not applied for an interim order to charge a tariff in excess of that approved by NERSA. Its unilateral implementation of an unapproved tariff was unlawful and breached its distribution license, Mantashe said.
When NERSA became aware of the City’s non-compliance, it sought a meeting with the City, but the City refused to meet stating it had lodged a review case in the High Court. It was NERSA’s view that it was prudent to await the outcome of these proceedings before implementing its own processes.
The City and NERSA were in court dealing with tariff matters of 2022/23 and 2023/24, Mantashe said.
“The outcome of the two matters will address the effect of the conduct of the City on customers and what remedies should be implemented to correct the wrong that has been done and the period within which such remedies should be implemented.”
* Other Metros, including Ethekwini, that sought to implement tariff increases above the NERSA rate last year complied with national regulations after engagements with NERSA.
Issued by Brett Herron, GOOD Secretary General, 10 April 2024
