Mayor’s open letter to residents: ‘Enough with Eskom’s steep increases and power monopoly’

18 August 2021  

While households across South Africa feel the pinch of Eskom’s steep 17.8% increase for 2021/22, Mayor Dan Plato says Cape Town and all municipalities are still forced to buy all electricity solely from Eskom.

‘National government is yet to cut the red tape that will enable us to buy from independent power producers. We are working every day to change this. As Mayor, I want to make this City’s position clear: Enough with Eskom’s steep price increases and power monopoly.

‘The future cannot be more Eskom monopoly power, only competition will bring the electricity pricing, and reliable supply, that households and our economy needs,’ reads Mayor Plato’s open letter to Cape Town residents.

The Mayor’s letter assures residents that the City of Cape Town is leading the charge to diversify energy supply and promote competitive pricing for consumers, including:

- Protecting City-supplied customers from Eskom’s load-shedding as far as possible, among others using the Steenbras Hydro Pump Station.

- Getting the Atlantis Power Station up and running by 2023, with plans for a renewable energy hub at the Athlone Power Station.

- Planning to procure at least 300 MW of energy from independent producers, including ongoing consultation with national government to speed this up.

- Pursuing a range of renewable energy projects from 1 MW to 100 MW, to be owned and operated on municipal land, with a call for proposals issued on low-cost finance solutions over a period of 20 years.

Protecting residents from Eskom’s steep increase in 2021/22

The Mayor’s letter states that ‘as a caring city, Cape Town provided more protection than all other metros against Eskom’s steep price increases for 2021/22’.

The City managed to come in at 32% below Eskom’s national increase to municipalities (13,48% vs 17,8%). This is despite the fact that it costs Cape Town 3% more to buy electricity than cities situated closer to Eskom’s generation plants in the north, states Mayor Plato’s letter.

‘The City was able to absorb some of Eskom’s increase by running a cost-efficient electricity service, even though we are on tight margins with increasing input costs.

Residents in Cape Town can rest assured that money is not wasted, and all income from electricity sales goes toward the provision of services. This includes load-shedding protection for City-supplied customers where possible, and 80% of electricity outages fixed in under 3,5 hours,’ Mayor Plato writes.

The letter outlines further ways in which the City continues to offer help to struggling households, including:

- 27% of City-supplied Cape Town households get free basic electricity on the Lifeline tariff, among the highest proportion of households for any metro in the country (Gauteng average = 15.9%).

- Lowest commercial and residential rates of metros in South Africa, with Cape Town 25% lower than Johannesburg, and over two times lower than eThekwini based on the cent-in-rand rate, a statutory measure to calculate property rates.

- R3,35 billion in rates relief for 2021/22, including R1,99 billion for indigent relief and R1,35 billion in rates rebates.

- R4bn debt write-off and payment incentive is available to aid struggling residents and foster a culture of payment.

- Pensioner, disabled, and indigent rebates as well as rebates for public benefit organisations.

- In cases of debt recovery, limited deductions on prepaid electricity purchases only occur if there is no payment arrangement in place despite warnings and notifications, or if the terms of an existing arrangement are not being honoured.

Cape Town tariffs among the lowest of all metros

Accompanying the Mayor’s open letter are tables showing that Cape Town residents generally get more units compared to Johannesburg, with tariffs among the lowest of all metros, especially when you use less.

Cape Town is still almost R300 cheaper than Johannesburg for 600 units, including all fixed monthly costs and VAT (R1 634,50 vs R1 928,83).

The subsidised lifeline electricity tariff is available to households with prepaid electricity meters using an average of less than 450 units per month, and:

- A property value less than R400 000; OR

- Registered indigent (R7 000 or less monthly household gross income); OR

- Registered for disabled or pensioner rebate (including rental tenants who would otherwise benefit from this property rebate)

On the Lifeline tariff, households receive:

- 60 units free electricity if consumption is less than 250 units per month;

- 25 units free electricity if consumption is greater than 250 units but less than 450 units per month.

- No fixed charge

- A subsidised tariff of R1,64 per unit incl. VAT (after free units, and up to 350 units used). From 350 - 450 units (average usage ceiling for this tariff), a normal ‘Block 2’ rate of R3,31 per unit incl. VAT applies.

Reducing unit costs and getting more units for your money

In terms of the electricity tariff structure, it costs less for the first 600 units bought in each calendar month on the Home User/ Domestic Tariffs, and less for the first 350 units on the Lifeline Tariff (including free units).

This use-less-pay-less system generally helps lower tariffs for the majority of households in Cape Town, with average monthly consumption levels generally at around 600 units or less for households on the Home User or Domestic Tariff.

The Mayor’s open letter concludes by calling on residents to access the range of support on offer from the City, with advice including:

- If you have debt arrears, make a payment arrangement.

- If you qualify for indigent or pensioner assistance, approach the City.

- Large bulk electricity purchases are not cheaper. When buying in bulk, one runs the risk of moving into a higher tariff category. Always buy only what you need for a calendar month, and try to keep usage below 600 units per month on the domestic tariff or home user tariff, and below 350 units per month on the lifeline tariff.

- Save electricity by turning the geyser down to 60°C; showering instead of bathing (80% less water and five times less electricity); and using energy-saving light bulbs, such as LEDs (up to six times less electricity).

Contact the City for help

Residents can contact the City’s call centre on 0860 103 089 for help with the range of support on offer for struggling households, including switching to prepaid to help with monthly budgeting.

For advice on ways to save electricity – including no-cost, low-cost and invest-to-save smart tips - visit: https://savingelectricity.org.za/

Issued by Greg Wagner, Spokesperson to the Executive Mayor, 18 August 2021