New water restriction tariffs hit Cape Town: what you need to know

[The_Right_Honourable_Brit]

In normal times they do profits.

If you take into account the massive reduction of the consumption vs the tariff increase, I’m not sure that they make profits.

Their cost is not buying water but maintaining infrastructure and staff, these haven’t changed whether the water is used or not.

What he says is not impossible at all.

They increased at the lower end by about 6 or 7 times what it was. Trust me, even with the reduction in usage, their coffers are going to explode with all the extra cash.

 

[xrapidx]

Don't forget they have by default also increased the sewerage cost, as it's a percentage of water.

My bill was R28 this month using 7kl over 40 days. A few years ago I used to pay R14 for about double that. Next month I'll probably be paying close on R100 for much less than 7kl.

 

[f2wohf]

They increased at the lower end by about 6 or 7 times what it was. Trust me, even with the reduction in usage, their coffers are going to explode with all the extra cash.

Anyway, their accounts should be public. Will be easy to verify next year.

 

[AchmatK]

Don't forget they have by default also increased the sewerage cost, as it's a percentage of water.

My bill was R28 this month using 7kl over 40 days. A few years ago I used to pay R14 for about double that. Next month I'll probably be paying close on R100 for much less than 7kl.

I only foresee more people augmenting their usage or disconnecting from the municipal water supply completely which will lead to even less revenue from water.

I should be off the municipal water supply by the end of this month which will see them lose a few hundred rand.

Longer term will see the same with electricity as the costs has come down sufficiently to make it viable. Eventually, the only money they will see from me is the property rates.

 

[Koosvanwyk]

In normal times they do profits.

If you take into account the massive reduction of the consumption vs the tariff increase, I’m not sure that they make profits.

Their cost is not buying water but maintaining infrastructure and staff, these haven’t changed whether the water is used or not.

What he says is not impossible at all.

The Municipality of Cape Town annual report is publically available

For the 2016 financial year the Municipality of Cape Town earned revenue of approximately R35,000,000,000 and expenses of approximately R31,000,000,000. Surplus for the year amount to R 4,000,000,000. This is a profit margin of 12% which is well below the international norm of +/- 20% (go and study the financial statements of a few other cities).

A 12% profit margin is hardly excessive and actually rather low

A much better way to see if the municipality is overcharging residents is to look at the cash flow statement, this tells you how much of the cash receipts from ratepayers are being re-invested into infrastructure vs how much is used to meet loan obligations. Again the 2016 net cash inflow is a measly R 133,000,000 for the year which is rather thin positive cash flow for a city the size of Cape Town.

 

[Koosvanwyk]

In normal times they do profits.

Their cost is not buying water but maintaining infrastructure and staff, these haven’t changed whether the water is used or not.

This is not a very clever statement, staff cost and maintenance of infrastructure is definitely not a fixed cost.

Ever heard of inflation ?

 

[Koosvanwyk]

I only foresee more people augmenting their usage or disconnecting from the municipal water supply completely which will lead to even less revenue from water.

I should be off the municipal water supply by the end of this month which will see them lose a few hundred rand.

Longer term will see the same with electricity as the costs has come down sufficiently to make it viable. Eventually, the only money they will see from me is the property rates.

Look out for the city slowly changing the mix of "water supply cost" vs the "cost of severage". It is difficult to go off grid for severage !

Ground water belongs to the government, and not to the property owner extracting it, so the city will most likely also be investigating ways to charge for this (as is being done in a number of other cities outside of Africa)

 

[f2wohf]

This is not a very clever statement, staff cost and maintenance of infrastructure is definitely not a fixed cost.

Ever heard of inflation ?

I never said it was fixed but rather that if 100 liters or 100 million liters are used in a month, it won’t change much their water operations and maintenance expenditure, which would be the bulk of their water expenditure (excluding infrastructure projects to have a constant scope).

Hence much less consumption at a higher tariff means that they might not earn more from water than before the drought since their base costs haven’t changed (except inflation obviously) while the quantity sold and the price both changed.

We’ll probably have to wait for 2017 and 2018 financials to see the impact.

 

[Zoomzoom]

I only foresee more people augmenting their usage or disconnecting from the municipal water supply completely which will lead to even less revenue from water.

I should be off the municipal water supply by the end of this month which will see them lose a few hundred rand.

Longer term will see the same with electricity as the costs has come down sufficiently to make it viable. Eventually, the only money they will see from me is the property rates.

And they will respond with more charges that are not linked to consumption to make up the difference. Basically you can't win.

 

[air]

And they will respond with more charges that are not linked to consumption to make up the difference. Basically you can't win.

OK, so how do you expect them to recover for their cost base, which can be fixed to a degree?

 

[Zoomzoom]

OK, so how do you expect them to recover for their cost base, which can be fixed to a degree?

huh? All I'm saying is that going off the grid is not going to make municipal costs vanish. All that happens is that they implement charges not linked to consumption to ensure their income doesn't drop.

Of course they never correlate high charges with people wanting to get off the grid and/or as a response to supply interruptions (such as load shedding) and that putting up the charges is counterproductive. The higher the charges the less people want to pay them.

Unfortunately the reality is that the people who can afford the infrastructure to get off grid are also the people on whose pocket the increases will make the least impact (either before or after they stop paying for water and electricity). It is the people who can least afford the increases and do not have the wherewithal to get off-grid who bear the brunt of the burden. Unfairly I might add.

 

[PeterBee]

Anyway, their accounts should be public. Will be easy to verify next year.

The Treasury publishes a quarterly report on municipal revenues and expenditures, by municipality, in great detail. First quarter (Sept 2017) showed a rather small decline in net water revenue, but then in winter demand is low. Next report should be out in March.

Does the City make a profit on water and sanitation ? Not sure, the appropriation item shows a surplus, but what is actually included in costs and what is not, is not clear. Usual story with CoCT.

 

[PeterBee]

huh? All I'm saying is that going off the grid is not going to make municipal costs vanish. All that happens is that they implement charges not linked to consumption to ensure their income doesn't drop.

Of course they never correlate high charges with people wanting to get off the grid and/or as a response to supply interruptions (such as load shedding) and that putting up the charges is counterproductive. The higher the charges the less people want to pay them.

Unfortunately the reality is that the people who can afford the infrastructure to get off grid are also the people on whose pocket the increases will make the least impact (either before or after they stop paying for water and electricity). It is the people who can least afford the increases and do not have the wherewithal to get off-grid who bear the brunt of the burden. Unfairly I might add.

+1

If you socialise the supply of water, then everyone has to stay on the municipal grid, and underground water has to belong to the state.

 

[Archer]

The Treasury publishes a quarterly report on municipal revenues and expenditures, by municipality, in great detail. First quarter (Sept 2017) showed a rather small decline in net water revenue, but then in winter demand is low. Next report should be out in March.

Does the City make a profit on water and sanitation ? Not sure, the appropriation item shows a surplus, but what is actually included in costs and what is not, is not clear. Usual story with CoCT.

Is that why CoCT gets unqualified audits most of the time? One can see the bias in some posts from the moon

 

[xrapidx]

Unfortunately the reality is that the people who can afford the infrastructure to get off grid are also the people on whose pocket the increases will make the least impact (either before or after they stop paying for water and electricity). It is the people who can least afford the increases and do not have the wherewithal to get off-grid who bear the brunt of the burden. Unfairly I might add.

The people who go off the grid are the people who are tired of the governments continued incompetence - and who no longer want to pay, and be penalized for the pleasure.

I mean look at everything we pay for due to government incompetence, private schooling, private health care, private security, why not private water and private electricity supplies.

 

[PeterBee]

Is that why CoCT gets unqualified audits most of the time? One can see the bias in some posts from the moon

The published municipal budget shows a profit/surplus on water services - it is not clear if only direct costs (operation of pumps, plants, treatment and bulk water purchase costs etc) are raised against revenue, and other related costs (salaries, vehicles etc) are in the general expenditure.

You have the City saying they make no profit on water sales, but we don't really know do we? This is not a question that an audit process would address.

The City's published budget is just not user friendly, in terms of transparency and accessibility for ordinary folks.

 

[Nanfeishen]

The people who go off the grid are the people who are tired of the governments continued incompetence - and who no longer want to pay, and be penalized for the pleasure.

I mean look at everything we pay for due to government incompetence, private schooling, private health care, private security, why not private water and private electricity supplies.

The regulations and bureaucracy involved in both are geared towards parastatals and skewed in favour of them.
One can clearly see it within the energy sector with the fact that regulations, tariffs, import limits, and exceptionally high cost of off grid power systems, not to mention the lack of availablity, lack of encouragement of use and lack of implementation in new developments or large building projects.

An off grid water system fitted to ones house is a no brainer, its easy simple and could really work rather well . All one requires is a supplier who's water standard meets the required standards set forth for safe consumption, and a small fleet of tankers to supply those houses that choose to go off grid at X cost per litre.

 

[biometrics]

Got this from Rawson:

*Disclaimer: Information supplied courtesy of Attorneys SSLR Inc,
Cilna Steyn (Director) Tel: 086 100 SSLR (7757)
www.rawson.co.za

Day Zero for Rental Market

Our beautiful country is faced with one of the worst droughts in history. Day Zero for Cape Town has already been
moved up to 12 April 2018. With this date fast approaching, it leaves the rental market with some uncertainty
regarding the legal position of landlords and tenants affected by this crisis. Would landlords be required to pro-
vide water to tenants? Would tenants be required to maintain a property including gardens, drains and the likes
without water available to them?

A severe drought like this, is in terms of South African Common Law, Vis Major or an Act of God. South African Com-
mon Law is based upon Roman Dutch Law, which is shaped and refined in our Courts by case law. The principle of
Vis Major (Act of God) indemnifies parties against claims by one another for damages suffered as a result of an Act
of God. This principle will always find application in lease agreements.

In rental agreements where no written lease agreement was concluded, in other words a verbal or tacit lease
agreement, this principle will automatically contain this protection for both parties. The drought would not allow
the tenant the opportunity to cancel the lease agreement or claim damages from the landlord or due to failure to
supply water to the premises. The same principal applies to the landlord, this will mean that a landlord will not be
allowed to cancel the lease agreement, have a tenant vacate or not allow a tenant to take occupation of a premises
because of the drought.

In the majority of written lease agreements, this principle will be dealt with at length. The typical lease agreement
will clearly indicate that no Act of God can give rise to a claim against either party. This would have the effect that
the tenant would not have the right to cancel the lease agreement because of the landlord’s inability to supply
water due to drought. An example of this would be a tenant deciding to cancel a lease agreement in Cape Town
in order to relocate. If, however the lease agreement is governed by the Consumer Protection Act (CPA) the tenant
would in any event be entitled to cancel the lease agreement with 20 business days’ notice and then only face the
reasonable cancellation penalty, as contemplated in the CPA. The drought would not give the tenant grounds to
cancel the lease agreement, without penalty.

In terms of a lease agreement the landlord has an obligation to provide the tenant with undisturbed use and
enjoyment of the premises, water supply to a premises is incidental to occupation, for this reason the landlord
would never be allowed to limit water supply to a premises. However, in a case like this where the reason for not
supplying water is a result of an Act of God then the landlord cannot be held responsible for the lack of supplying
the service. It is essential to carefully consider the terms of the lease agreement regarding this aspect and not
make any assumptions.

This position is simple enough in lease agreements where the tenant pay utilities billed separately, as this would
simply mean that the amount billed by the municipality for water would be less, as the water consumption is less
due to the drought. As such not affecting either party in that regard in any way. However, a landlord is not enti-
tled to receiving payment for a service that is not supplied. This would be the position where a lease agreement
provides that water and electricity form part of the rental payable and not metered separately. If the amount paid
to the landlord can clearly be quantified for the portion of water supply, that amount should be reduced to reflect
the true water consumption by the tenant. If the amount that is paid for water consumption cannot clearly be
quantified, but simply forms part of the rental amount, this could lead to disputes that could run into very costly
and time-consuming litigation.

In the face of a natural disaster, as currently present in Cape Town, the principles of fairness and equity would
prevail above all else. In cases where water is included in the rental and cannot be quantified specifically, the
suggestion would definitely be for the landlord and the tenant to consider this, have a meaningful conversation
regarding this and find an amicable solution that would be fair to both parties. Neither one of the parties can rely
on a damages claim, as the other party would definitely have the defence of Vis Major and could lead to thousands
of unnecessary court or tribunal cases creating undue pressure on the legal system.

It is heart breaking that our country is faced with a disaster like this and all citizens should do their part to help one
another to get through this as comfortably as humanly possible. As SSLR Inc. we will do our utmost best to assist
the rental market in this crisis. Please feel free to contact us regarding this matter.

 

[noxibox]

I can foresee people tapping into underground water and simply not informing the city due to the new requirement of installing a meter and reporting usage. As long as they continue to use some municipal water and their underground water use is not visible from outside the property no-one will be any the wiser.

http://www.mambaonline.com/2018/01/23/cape-town-pastor-blames-gays-cape-town-drought/

How does he know God isn't angry with him and other unpleasant nuts like him?

Something I always find puzzling, how can single residential use more than 10kl/month? Is that places they haven't installed flow-restrictors yet?

Because in spite of their tough talk they're way behind on enforcement and installation of meters. Some people can afford to pay a lot of money for water and don't care how much they use, so they won't cut their use unless forced to do so.

 

[biometrics]

This graph was apparently for 5 Feb. I note the 25.5% point on the graph is actually not at the correct spot. Latest is we're at 23.7% (http://ewn.co.za/2018/02/07/dams-that-supply-cape-town-fall-further-as-water-crisis-looms).

When I plot 7 Feb and 23.7% it looks like we are in the "failure zone" Am I reading this correctly? Looks to me like day zero is March 20.