Outrage over Joburg’s “100%” electricity price hike

The Organisation Undoing Tax Abuse (Outa) has urged the City of Johannesburg (CoJ) to reconsider its controversial new prepaid electricity fixed charge.

The National Energy Regulator of South Africa (Nersa) recently approved municipal electricity tariff hikes effective from 1 July 2024.

Those changes included a new R230 electricity fixed charge for prepaid electricity users in Johannesburg.

The municipality had proposed the charge on repeated occasions in the past few years, but it was withdrawn following outcry from the public and civil rights organisations.

Its eventual implementation has caught many residents by surprise, as it is deducted with their regular electricity purchases.

Outa’s executive manager for local government Julius Kleynhans has called for the charge to be scrapped, arguing it would have significant financial repercussions on Joburg’s communities.

“For many residents, particularly low-income families who rely on prepaid meters to manage their electricity usage, this extra R230 a month is an insurmountable expense,” said Kleynhans.

He added that it essentially penalises households for their efforts to control and reduce their electricity consumption.

Julia Fish, manager at Outa initiative JoburgCAN, also said the charge was poorly publicised and badly implemented, with little consideration of the consequences.

“Despite multiple requests for information on the number of households on the City’s indigent register [who are] exempt from the fee, the City has not responded,” she said.

Fish added that the charge effectively increased the cost of electricity costs for low-consumption households by over 100%.

She also said prepaid tokens exclude vital information like how much money was allocated to the charge, to VAT, and to actual units of electricity.

“The lack of transparency does not meet mandatory regulation compliance,” said Fish.

Outa listed several issues that the new charge could cause in the City of Johannesburg:

• Increased financial strain on vulnerable households
• Increased risk of disconnections as households struggle to pay for the electricity they need
• It could encourage illegal connections as customers try to avoid these charges
• Civil unrest in pressured communities
• Deepening inequality

“Outa believes that it is crucial that the City applies reasonable tariffs whilst it ensures that it runs cost-effectively,” the organisation said.

“It cannot pass costs on to consumers due to its own inefficiencies it consistently fails to address, such as inadequate debt collection of conventional electricity tariffs and high electricity losses.”

Public outcry

Many Johannesburg residents have voiced their frustration over the charge on social media and the MyBroadband Forum in the past few days.

“Topped up R500 this morning and got 99.30 units,” one MyBroadband Forum user posted.

They included a screenshot of their prepaid electricity recharge, for which roughly only R235 of the R500 went towards electricity credits.

Another complained that the service fee variance between postpaid and prepaid customers — before the implementation of the R200 prepaid charge — was to cover finance actions needed to manage postpaid accounts.

“These do not exist for prepaid, therefore there is no need to get parity between ‘prepaid’ and ‘postpaid’ in service fees,” they added.

The Democratic Alliance (DA) has also called out the City of Johannesburg for implementing the surcharge.

Speaking to SAfm, DA Johannesburg councillor Nicole van Wyk said the new tariff presents a major challenge for residents.

“City Power is currently sitting with a R40 billion overdraft because they are dealing with non-payers,” said Van Wyk.

“Prepaid is a great incentive to get your money upfront, but now you’re penalising those people who are paying upfront for the power they are going to be using.”

She added that Johannesburg residents face increased electricity tariffs, a 7.7% increase in water use costs, and a further 5% increase in refuse.

The DA also implements fixed charges for prepaid users in several municipalities that it governs, including the City of Cape Town.

However, in the case of the latter, this charge only applies to properties with valuations over R1 million. Therefore, poorer prepaid households are automatically exempt from the charge.

Low-usage middle-class households — like those with grid-tied solar power — are paying a fixed charge of R324 per month from 1 July 2024.