Cape Town makes no profit from the sale of electricity – Dan Plato

Mayor says certain media outlets continue to misinform residents about electricity tariffs

Council Speech by the City's Executive Mayor, Alderman Dan Plato

31 July 2019

Good morning, I’d like to start today with a moment of silence out of respect for the victims of the Masiphumelele fire that has left at least one person dead and hundreds homeless; for the families of the six women that were fatally shot in Philippi East and to the families of every other person who has died from a gangsters’ bullet; for Mr Ivan Ivanov, the Ukranian visitor to Cape Town who was tragically killed on the weekend by heartless criminals; for our two colleagues who passed away in the Solid Waste Department, Siyabulela Elaija Mtshagi, and Cecil Esteruizen, and for Constable Songezo Khetiwe, who was killed in the line of duty in Delft protecting the people of this City.

Thank you.

Let me now share with you some good news – as some of you may have already heard, our dam levels are now over 72% full! And our residents continue to be water-wise, for which we are very thankful as this is a clear demonstration of the wonderful working relationship that government should have with its residents. As a result of these levels, we will, of course, be looking at relaxing tariffs at the end of the hydrological year in October/November to provide some additional relief to our residents. 

I also want to congratulate our South African Netball team, the Spar Proteas, for doing so well at the Netball World Cup in Liverpool last week. They have done us proud and we are looking forward to seeing them hold the trophy high when we host the World Netball Championships in Cape Town in 2023! But first, we can look forward to the African Championships being held right here in Cape Town in October this year! Then later this year we can support our team in the international test against England, also being held in our beautiful city. Let’s make Cape Town the home of South African netball! 

As this is the first council sitting since our new Premier was elected, let me congratulate Alan Winde as the new Premier of the Western Cape. I have already had several positive meetings with Premier Winde and I am looking forward to working with him over the coming years to make sure the province and City are aligned to strengthen our service delivery output for our residents.

And now to all the councillors, let me say a big welcome back from recess to all of you! I hope you enjoyed the time, that you’re well-rested, and that you’re ready for action over the coming months! Because that is what this administration is all about – taking action and making sure the best services are delivered to our residents.

While my ‘Keep Cape Town Clean’ campaign has gained some great momentum and will continue in the coming months, I will also be focusing on a ‘back to basics’ programme. I want to see how you are making sure we get the basics right in your wards too. Parks must be neat and tidy, potholes must be fixed, street lights must be on at night, our neighbourhoods must be clean and basic services must be delivered without any problems. 

The next part of my ‘back to basics’ campaign will be a focus on pothole repairs and I will soon be joining our roads department in communities across the metro to make sure we are responding to the requests from our residents. I still get many complaints directly to my office because they are not addressed timeously. I will always have an open office but we need to be more responsive because the residents give me their reference numbers so the complaints have been logged but not addressed. This is not acceptable.

I am sure by now we have all taken note of the army’s deployment to the most gang affected areas of the Cape Flats.

Former Premier Helen Zille and I have been calling for this deployment since as far as back as 2014! And we called for that deployment, so that the army can establish a presence that will allow the police to do their work – to investigate, to make arrests, to confiscate drugs and weapons – that is what we want to see and I hope that the SAPS are taking full advantage of the army’s deployment.

What is of serious concern though is a report released by the Western Cape Department of Community Safety last week, confirming what many of us have said for a long time – that the detectives working in SAPS are cripplingly overburdened with caseloads of more than 200 cases per detective! This is setting them up for failure, it is no wonder there is only a 3% conviction rate for gang-related crime in this province. 

As Minister Albert Fritz pointed out last week, there is a shortage of 548 detectives in the Western Cape and 142 existing posts are unfilled. But while the national government is ignoring the policing crisis in this province, many dedicated police officers continue to work day and night to protect our communities, and they are putting their lives on the line.

When it comes to the safety of our communities we as a collective must take hands, and not play politics, not make silly comments and play a blame game. It is all of our responsibility to make our communities safer, and I am very pleased to see some of our councillors doing everything they can to help their communities. 

Speaking of playing politics, I see the media has once again fallen for the ANC’s outrage manufacturing machine by trying to paint this City as one that doesn’t care for its homeless, when the complete opposite is actually true – we do more to protect, assist and help our homeless than any other city in this country. 

Many of those who live on our streets actually have homes to go to, but choose the streets instead. Of course, there are also many who are legitimately homeless due to various circumstances, and it is these who we constantly try to help through our positive social interventions.

It is unfortunate that within our homeless and street people community there are criminals hiding from the law. 

They are the ones who give the rest a bad name – there is no place for aggressive begging or drug selling, or smash and grabs – law enforcement have identified and arrested a number of criminals who try and hide amongst the homeless. 

We have laws in this country and it is our duty to uphold those laws, no matter who breaks them. There is no by-law just for homeless people, that is absolute nonsense. By-laws are for all of society. We cannot dare to start making exceptions. There is no reason to sleep on the street or to set up illegal structures on sidewalks – there are beds in shelters, they are not full, but some of those who should be making use of the shelters flat out refuse the services available. 

We have pioneered Safe Spaces in this city, we heavily subsidise the many shelters that still have empty beds, we have job creation opportunities for our homeless, skills development programmes, computer training programmes and much more. But we cannot force those who don’t want to make use of these programmes to get help, it is up to them to want to make use of the services we provide. 

In this city, we follow due process, no matter how challenging or difficult that may be, because that is the only way to ensure good governance and a corruption-free administration. Where we can be better we set ourselves on a course to do that. Like with the N2 MyCiti contract that is currently being reviewed for the Khayelitsha and Mitchells Plain routes.

This was originally intended to be a top-up service as a result of the near-collapse of rail service that is run by the national government. While we have assistance and cooperation from both provincial and national government on a positive way forward, the matter is in court at present which prevents me from speaking in more detail on it. However, once the matter has been concluded I will be issuing a detailed communique on the outcome. I want to thank Alderman Felicity Purchase for her professional handling of this matter. I know that she is putting right many of the short-cuts that were taken under the previous leadership. 

I am very pleased to announce that the Mayor’s Urban Regeneration Programme, or MURP, is progressing well, with several site plans already drawn up for areas including Bishop Lavis, Bonteheuwel, Manenberg and Hanover Park. Other areas are in the pipeline too.

These projects require ongoing community engagement and I am eager to see the implementation of these plans – we have the budget behind the programme, so I am looking forward to seeing our investment uplift these communities, transform them from within, and seeing the active role that our residents will be playing in the process – because we need the communities to work with us – that is how we govern. I know Cllr Twigg will be hosting a number of public meetings from next month to keep the momentum going. 

Another issue we need to address because there are certain media outlets that continue to misinform our residents is that of the City’s electricity tariffs. 

I would like to emphasise that the City’s tariffs are formulated in accordance with the Municipal Systems Act and the Municipal Finance Act, as well as the guidelines established by the National Energy Regulator, NERSA. The claims by some people that the City did not receive approval from NERSA on tariff increases is simply not true. NERSA is mandated to approve the regulated component of tariffs, and has approved the City’s tariff increase application for 1 July 2019 to 30 June 2020.

This year, the City has to pay Eskom 15,6% more to purchase bulk electricity, but we have absorbed part of this increase by raising our tariffs by only 8.8%. Our energy efficiency saving initiatives implemented within City facilities, including energy-saving street lights has helped to keep this increase lower than national government’s increase. We have done this so that our residents do not have to feel the full impact of the increase.

The City makes no profit from the sale of electricity. Ninety percent of the income generated goes towards securing the supply of electricity to our residents: 65% on purchasing bulk electricity from Eskom and 25% on grid maintenance. The remaining 10% goes to the rates account for shared services across communities

There is also a lot of misunderstanding around the fixed service charge on the Home User Tariff. This is a monthly service charge aimed at recovering the cost of maintaining the service connection.  All users, regardless of how much or how little electricity they use, require a stable and well-maintained service connection. It is payable by all property owners whose residential properties are valued above R1 million.

Before the Home User Tariff was introduced, all residents using less than 600 units a month were exempt from this service charge. This included customers living in high-value properties, who were not financially vulnerable. This was not sustainable, and unfair to lower-income residents using more than 600 units, who were in effect subsidising wealthier customers using fewer than 600 units. 

The Home User tariff seeks to correct this, and also has a lower unit cost for the first 600 units of electricity to offset the fixed charge. If there was no fixed service charge, then the consumptive charge would be significantly higher.

The NERSA guidelines on tariffs allow for fixed charges to be implemented. This model of recouping fixed charges separately has also been implemented by Eskom and other metros in South Africa. It is internationally accepted as the norm for recovering fixed costs incurred in the rendering of services. This includes the maintenance of our electricity grid, power lines, substations, transformers and electricity meters.

If we did not implement the service charge, the consumptive charge would have to be much higher to compensate. Or, we could simply stop all maintenance and services, which would very soon result in the collapse of the grid. And no-one wants that.

We are also waiting to make our case in the High Court next month to buy electricity from independent power producers and not rely solely on Eskom. 

Before I close off today, I want to make sure that we don’t lose focus on the critical importance of job creation, especially considering that the quarterly labour force survey was released yesterday – a report showing officially that the Western Cape was the only province to see a drop in unemployment. 

Job creation was President Cyril Ramaphosa’s promise to the people of South Africa and one of the many promises that he and the ANC have failed to deliver on after his State of the Nation address in 2018 with the same empty promise made by the president a few weeks ago – unemployment is now at 29% across South Africa, its highest in 16 years! 

Yet the Western Cape and Cape Town under the Democratic Alliance was the only province to see a year on year decrease! This is the DA difference. Cape Town continues to have the lowest unemployment rate in the country. This doesn’t just happen, it requires hard work, the right policies and the right people in the right positions – that is what the DA provides to our residents. We do not sit back and rest though, because youth unemployment is still too high.  

To further support our youth and business entrepreneurs with employment opportunities and growing our economy, I will be officially opening a brand new business hub next week with Alderman James Vos, the Mayoral Committee Member for Economic Opportunities. The Business Hub will connect government, businesses and business development services, help existing SMMEs and entrepreneurs grow and expand to ensure sustainability and provide significant opportunities to improve the ability of the SMMEs and entrepreneurs to do business in Cape Town.

This hub is the culmination of months of hard work by Ald Vos and our City officials and will provide access to thousands of budding entrepreneurs and SMMEs. I hope the media will attend next week’s launch to find out more about how we continue to grow the Cape Town economy!

Let me also add that for the 2018/19 financial year, R2,7 billion worth of investment was facilitated by the City’s Strategic Business Partners and Special Purpose Vehicle (SPV) companies that are supported by the City to grow investment, job creation and skills development.

These investments created 4 764 jobs and provided skills training to 2 109 individuals during the City’s past financial year (ending in June 2019). The City’s Department of Investment and Enterprise has clearly been hard at work, so thank you!

So while the President talks, we get on with action in Cape Town. 

In Cape Town and in the Western Cape, under the Democratic Alliance, it is clear that we are a government of action, one just needs to look at our delivery compared to the delivery under ANC run provinces.

Later today we will be honouring some of our councillors with the status of Alderman for their ongoing commitment to serve our communities and provide the best possible service delivery to our residents. These councillors are fully deserving of this civic honour and I am grateful to see such hard workers in this council. 

In closing, let me say - councillors, we have work to do, and I hope you have already set up the public meetings in your wards, and regular walkabouts. The meetings should cover all areas, and start taking place by the 15th of August so please email the dates and details to my office as I would like to join as many of those meetings as I can. I also want these dates widely circulated in the public and in the media – our public need to join these meetings because we can only make things better by working together. 

Thank you.

Issued by Greg Wagner, Spokesperson to the Executive Mayor, 31 July 2019