Warning about Joburg’s R200 prepaid electricity fees

The City of Johannesburg’s R200 prepaid electricity surcharge implemented on 1 July 2024 is critical to its 2023/24 financial year budget.

The metro passed an amount of R83 billion through its funding model for the 2023/24 budget, and scrapping the fee could create financial problems for the municipality.

The funding is critical for various aspects of municipal management, including maintaining its electricity distribution infrastructure.

According to electricity and energy minister Kgosientsho Ramokgopa, municipalities are forced to raise tariffs to replenish and maintain the infrastructure.

“We did warn a few years ago that at the rate of perennial underinvestment in relation to municipal distribution infrastructure, you are likely going to hit a snag sometime down the line,” he told SABC News.

“With the gradual erosion of the municipal revenue base as a result of the underperformance of the economy, we are seeing that they are investing less and less on the replenishment and maintenance of that infrastructure.”

“Then we are seeing a spike in municipal tariffs that is making electricity unaffordable, resulting in conditions of what I refer to as energy poverty,” added Ramokgopa.

He said energy poverty is when power is available through the grid, but poorer households can’t afford to access it.

“They must choose whether to reload the units on prepaid or buy bread or pay school fees. Those are difficult choices,” the minister added.

Johannesburg Mayor Kabelo Gwamanda said the R200 prepaid electricity surcharge — which outraged many residents — is part of the City of Johannesburg’s funding model, passed through the 2023/24 budget.

He added that the decision went through an extensive public participation process and that the metro engaged with communities to create awareness.

“This is a legislated fee that has to be paid by metros, in particular. All of them, Ekurhuleni, City of Tshwane, City of Cape Town, have been doing it for years,” said Gwamanda.

“As the City of Johannesburg, we needed to introduce it now.”

To this end, the surcharge’s implementation has been delayed for several years, with Johannesburg finance MMC Dada Morero saying it first came up in 2018.

“It also took long for the city to implement and other cities have long implemented the availability charge,” said Morero.

“So, Johannesburg, we stopped it in 2018 as we felt that there wasn’t sufficient public participation at that point.”

He added that Covid resulted in further delays to its implementation, adding that the metro completed a cost of supply study in 2023 and relaunched the plan.

Morero said the National Energy Regulator of South Africa (Nersa) approved the tariff adjustments, adding that it remains more affordable than all other major South African metros.

Dada Morero, City of Johannesburg MMC for finance

However, Morero also said the City of Johannesburg’s council was reviewing the R200 prepaid electricity surcharge.

“The review will be done within the approvals we already have from Nersa,” he said.

“We’ll look at the process of the Municipal Finance Management Act, which suggests that once you have passed the budget, you can only pass the budget once.”

“We’ll look into a number of factors. Look at the affordability in terms of the city and to what level we are able to carry this thing,” he added.

To this end, City Power announced that it would hold a technical media briefing on Tuesday to provide insight into the newly introduced charge.

According to its announcement, it will provide an explanation of the introduction of its R70 per month service charge, and a R130 per month capacity charge for prepaid customers, excluding indigent customers.

It also promised to unpack the utility’s plans to improve electricity reliability, bolster infrastructure maintenance, and elevate service standards.

“City Power experts will provide in-depth insights into how these tariff adjustments will benefit its customers and contribute to operational excellence,” it said.

However, City Power postponed the press briefing on Tuesday morning until further notice.