City Power warns infrastructure will crumble without R200 prepaid fee

City Power board chair Bonolo Ramokhele says the municipal power utility’s infrastructure will crumble if it scraps the R200 prepaid electricity surcharge implemented on 1 July 2024, Eyewitness News reports.

Despite this, the City of Johannesburg’s council is set to convene soon to debate and vote on scrapping the fixed fee.

“We must maintain the lines, substations, you name it and if we don’t invest in infrastructure, it will crumble and create a much bigger problem for all of us,” said Ramokhele.

Electricity and Energy Minister Kgosientsho Ramokgopa highlighted this issue shortly after the metro implemented the fee.

“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 said.

Ramokgopa added that municipal revenue generation had gradually eroded due to the challenging economy, resulting in less and less investment in replenishing and maintaining electrical 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,” he said.

City Power implemented the fixed fee on 1 July 2024 as part of its electricity tariff adjustments for 2024/25, sparking outrage among residents.

A MyBroadband forum member shared a screenshot of their prepaid recharge token. They had paid R500 to recharge, of which only R235 went to electricity units.

After residents shared their experiences and frustration over the surcharge, the Organisation Undoing Tax Abuse (Outa) urged the metro to reconsider it.

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

She added that the fixed fee effectively increased the cost of electricity for low-consumption households by over 100%.

Outa listed several issues that the new charge could cause in the metro:

• 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

Dada Morero, City of Johannesburg MMC for finance

City of Johannesburg Mayor Kabelo Gwamanda and MMC for finance Dada Morero have argued that the metro followed an “extensive public participation process” and engaged with communities to raise 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.”

Morero added that the fixed fee’s implementation had been delayed for years, with it first coming up in 2018. He also emphasised that other major metros have charged similar fees for years.

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

He said the Covid-19 pandemic and subsequent lockdowns resulted in further delays. The City of Johannesburg completed a cost-of-supply study last year and relaunched the plan.

Morero acknowledged the challenges the surcharge presents for many Johannesburg residents and said the metro had committed to reviewing it.

“The review will be done within the approvals we already have from the National Energy Regulator of South Africa,” he said.

However, he noted that, as stipulated in the Municipal Finance Management Act, a municipality can only pass its budget once, which the City of Johannesburg has already done.

The metro passed an amount of R83 billion through its funding model for the 2023/24 budget.

“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,” said Morero.