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Power costs killing businesses

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The cost of a unit of electricity for businesses is currently R2.38 a unit

Recession experts say it's too soon to panic. File Photo: IOL

SMALL businesses in Kimberley that are being charged an additional R242 basic levy for electricity are struggling to meet the exorbitant electricity costs and many fear they might soon have to close their doors.

While the Sol Plaatje City Council bowed to public pressure regarding a basic monthly charge for residents, businesses are still required to pay the basic levy, implemented from the beginning of July.

This basic fee ranges from R242 a month for small businesses and R299 for schools and public benefit activities, to between R1 150 to R3 532 for industries.

This is over and above the electricity units used.

Initially, the Sol Plaatje Municipality also approved an increase in the unit cost of electricity for businesses in the city but this was turned down by Nersa.

The cost of a unit of electricity for businesses is currently R2.38 a unit.

Diana Ringrose, from Property and Management Services, which rents out property to small businesses next to the City Hall, said yesterday that the high cost of electricity was killing small businesses in the city.

“We have around 20 small businesses trading in the complex next to the City Hall. Some of these businesses, which range from a hairdressing salon to a shoe repair shop and a dressmaker, have been with us for 15 to 18 years. However, they are really struggling to make ends meet in the face of the massive hike in the cost of electricity.”

She added that there appeared to be no pattern to how much the pre-paid electricity cost.

“In August, we paid for those shops that were unable to trade because they couldn’t afford to buy electricity due to the additional basic levy.

“This month traders found they had to put in between R300 to R400 before getting any units. There seems to be no pattern. When I spoke to the municipality, they too said they were not sure of how it worked and that I should wait until the outcome of the mayor’s fate, as nothing would be decided until this had been settled.”

Ringrose added that in the meantime one of the traders tried to buy electricity this week. “He had to put in R400 before getting 67 units, which won’t even last for a few days.

“In a climate where the government has proclaimed that SMEs are the way forward, this measure is very punitive. Last month some of our traders could hardly operate.”

According to Ringrose, the caretaker of the centre was boiling kettles and running extension cables to nearby traders so that they could keep operating.

“Traders are becoming increasingly frustrated. What is the levy being used for and why is there no concrete explanation being given to SMEs in Kimberley?”

The caretaker, Felicity Swartz, confirmed the situation and pointed out that in some instances traders were receiving only five units of electricity for R100.

“They are really struggling. These aren’t big businesses that take in lots of money a month. They are living day-to-day on the little bit they take in and are really trying to earn an income for their families but the municipality is punishing them. They don’t know what to do any more and many will have to close their doors if this situation continues.”

She added that the municipality had scrapped the basic levy for households but no one was saying anything about the levy being charged for small businesses.

“They cannot operate if they don’t have electricity and they cannot afford this levy.”

She stated further that despite several attempts to get clarification from the municipality, there were no answers forthcoming.

“I have been to the municipality several times without any success. Despite getting there early in the morning, and being sent from one official to the next, I leave at the end of the day with no answers.”

Businesses have also resorted to social media to express their frustration, with one pointing out yesterday that “apart from our business electricity account being much higher than usual, we also have a service charge of R1 150 added to our account”.

“The municipality’s switchboard answers and I am put through to someone but that person just doesn’t answer the phone so I cannot get any answers about why we are being charged an extra R1 150. Has anyone else had this, what is it for?” the person questioned.

A city office administration block also pointed out yesterday that they too were being charged industrial tariffs, including the R1 150 (including VAT) a month basic charge.

“Our electricity account has literally doubled since June. When we went to enquire at the municipality they gave us a copy of the Nersa letter, but there is no explanation why we are being charged industrial time-of-use. The municipality appears to have arbitrarily changed us from a commercial business to an industry and no one can explain or give any details.”

An old age home, meanwhile, pointed out yesterday that they were being charged domestic tariffs instead of public benefit.

“Because public benefit is a fixed charge for energy usage and not determined on a sliding scale depending on how much is used, we are paying more than R3 000 a month more for electricity than we should,” a spokesperson for the home said yesterday.

“I am not sure anyone at the municipality actually knows what is going on,” he added. “The entire billing system is chaotic. Electricity accounts have literally shot up – and even doubled in some instances – overnight.”

In response yesterday, the municipality confirmed that the tariffs were set by Nersa.

Municipal spokesperson, Sello Matsie, urged businesses concerned about their accounts to come in and discuss the matter with the municipality. “This also applies to organisations like old age homes that believe they are being charged the incorrect tariff.”

He pointed out further that the energy charge for commercial small power users had not increased from the previous year, adding that the only increase was the addition of the basic charge.

Matsie also explained that the term “industrial” used by Nersa was misleading.

“Kimberley does not have many industries, so for local users the term actually refers to large power users or what is known as time of use (TOU) users.”

He added that all businesses that were categorised as commercial small power users in the last financial year still fell into this category, which at the time was those using less than 100 kVA.

Those categorised as large power users in the previous financial year, now fell into the category labelled by Nersa as “industrial” or “TOU” users.

“If consumers currently categorised as commercial small power users would like to be charged according to time of use, they can apply to the municipality to do so as in some instances it may be in their interests to do so.”

From this financial year, time of use consumers (large power users) have also been further categorised into three sub-categories, namely those using less than 75 kVA, those using between 75 and 99 kVA and those using more than 100 kVA.

In response to comments that electricity costs had doubled, Matsie pointed out that it also needed to be remembered that June, July and August fell into the high season according to Nersa, so electricity tariffs charged during this period were substantially higher.

“Time of use consumers will therefore not only be paying the additional flat rate but also the higher tariff costs for the high season period.”

He urged anyone with queries to e-mail the municipality at [email protected]

Tariffs approved by Nersa (National Energy Regulator of South Africa) for the 2018/19 financial year:

(Costs reflected are excluding VAT)

Domestic (conventional and prepaid)

Block 1 (0 – 50 kWh) – 91.44 (cents per kWh)

Block 2 (51 – 350 kWh) – 117.56 (cents per kWh)

Block 3 (351 – 600 kWh) – 165.46 (cents per kWh)

Block 4 (more than 600 kWh) – 194.85 (cents per kWh)

Basic charge R/month – R226.09 (this is not being charged currently)

Commercial Conventional and Prepaid

Basic charge: R210.90 per month

Energy charge: 206.68 cents per KWh

Public Benefit Activities and Schools

Basic charge: R260 per month

Energy charge: 175.00 cents per kWh

Industrial tariffs (Large power users/Time of Use users)

Less than 75 kVA

Basic charge: R1 000 per month

Network access charge: R45.19 per kVA

Demand charge: R133.31 per kVA

Energy charges:

Low season

Peak: 151.78 cents per kWh

Standard: 109.84 cents per kWh

Off-peak: 90.98 cents per kWh

High season

Peak: 402.68 cents per kWh

Standard: 137.80 cents per kWh

Off-peak: 94.43 cents per kWh

75 – 99 kVA

Basic charge: R2 000 per month

Network access charge: R45.19 per kVA

Demand charge: R1 33.31 kVA

Energy charges:

Low season

Peak: 151 cents per kWh

Standard: 109.84 cents per kWh

Off-Peak: 90.98 cents per kWh

High season

Peak: 402.68 cents per kWh

Standard: 137.80 cents per kWh

Off-peak: 94.43 cents per kWh

More than 100 kVa

Basic charge: R3 400 per month

Network access charge: R45.19 per kVA

Demand charge: R133.31 per kVA

Energy charges:

Low season

Peak: 151.78 cents per kWh

Standard: 109.84 cents per kWh

Off-peak: 90.98 cents per kWh

High season

Peak: 402.68 cents per kWh

Standard: 137.80 cents per kWh

Off-peak: 94.43 cents per kWh