Big Johannesburg prepaid electricity lie

Energy analyst Chris Yelland said the City of Johannesburg’s prepaid electricity price increases are outrageous and have never been subject to a public process.

In July, the City of Johannesburg increased prepaid electricity prices for poor households by six to twelve times the inflation rate.

When considering the amount of electricity poor and marginalised households use, City Power’s prepaid electricity prices are 76% to 49% higher than those of Eskom.

City Power is 100% owned by the City of Johannesburg and is responsible for most of the electricity distribution and retail sales in Johannesburg.

City Power increased electricity prices by far more than Eskom. In addition, a fixed charge of R230 per month applies to most poor households.

This means that R500 will buy these poor households only around half the electricity it did before.

Many households with low energy consumption struggle with extreme poverty and unemployment, and the last tariff increase is a big blow to them.

Yelland warned that the high prepaid electricity price increases in Johannesburg are dangerous and may increase the risk of social unrest.

However, the City of Johannesburg responded, saying that increasing prices is in the best interest of all stakeholders.

Its executive mayor, Kabelo Gwamanda, said the higher rates created fairness and transparency in the city’s electricity tariffs regime.

“The newly introduced electricity surcharge for prepaid customers is the outcome of various council resolutions since 2018,” he said.

“It is intended to provide revenue to fund the city’s investment in new electricity infrastructure and maintenance of existing infrastructure.”

The city explained that following the adoption of the surcharge, the country was confronted by the Covid-19 pandemic, so the city postponed its implementation.

“The new electricity surcharge is necessary to create fairness and equality in the city’s tariffs regime,” Gwamanda said.

“Post-paid customers have been paying the surcharge, and only prepaid customers have been excluded.”

The introduction of the surcharge now seeks to end the unfair subsidisation of prepaid customers by post-paid customers.

Gwamanda added that, as required by law, the city undertook a comprehensive Integrated Development Plan (IDP) consultative process in all wards.

He said they consulted with residents and their representatives before the council approved the new tariff.

“There has been some opposition to the surcharge. However, as a responsible government, the city must ensure it optimally uses tariffs,” Gwamanda said.

This was needed to maintain the system and increase its capacity to meet the city’s growing population and economic needs.

Yelland slated these claims by Gwamanda and the City of Johannesburg, calling the price increases outrageous and dangerous.

“It is outrageous what is happening to poor, marginalised, and indigent households in Johannesburg,” he said.

“When you increase the price of electricity to the poor multiple times the inflation rate, you can expect trouble.”

He added that the suggestion that the City of Johannesburg followed a public process does not hold water.

“The reality is that this R230 per month fixed charge has never been subject to a public process by the City of Johannesburg,” Yelland said.

“The National Energy Regulator of South Africa (Nersa) has also not subjected it to any meaningful public process.”

Yelland added that Nersa and City Power’s roles in the prepaid electricity price increase debacle are disgraceful.

He argues that the new R230 fixed charge will have minimal impact on the City of Johannesburg’s finances.

Another problem is that the city will have difficulty collecting additional money from prepaid customers.

“It is going to encourage increased levels of electricity theft and bypassing prepaid meters,” Yelland said.

“You cannot get an extra R230 out of people who do not have the money. People will resort to electricity theft.”