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Ratepayers union objects to electricity tariffs

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Sol Plaatje ratepayers union (SOPRU) has written to the National Energy Regulator of South Africa (Nersa), CEO of Nersa Advocate Nomalanga Sithole, Sol Plaatje executive mayor Kagisho Sonyoni and Eskom group chief executive Andre de Ruyter regarding the exorbitant electricity tariff increases.

Picture: Couleur/Pixabay

SOL PLAATJE ratepayers union (SOPRU) has written to the National Energy Regulator of South Africa (Nersa), CEO of Nersa Advocate Nomalanga Sithole, Sol Plaatje executive mayor Kagisho Sonyoni and Eskom group chief executive Andre de Ruyter regarding the exorbitant electricity tariff increases.

SOPRU project coordinator Tumelo Mosikare pointed out that there were electricity losses of 15 percent whereas only 10 percent was permissible by Nersa,

“The cost of supply study carried out by the municipality, in which they have applied to Nersa for tariff increases intends to charge households a basic and capacity charge of R246,76 per month. This is despite the study itself pointing out that the municipality’s inability to collect debt, the high losses of electricity and own usage are the primary causes why it is not within Neresa formula for revenue.”

He pointed out that to date, there had been no attempt to investigate or show concern or interest in the matter by Nersa.

“Sol Plaatje municipality opted, since August 2021 to date, to rather use funds collected from electricity sales to primarily pay salaries instead of Eskom. They have accrued debt of over half a billion rand plus interest. The municipality intends on passing the buck to households by levying the two costs mentioned above and also increasing the price of electricity. It is further of concern that in 2020, Eskom CEO Andre de Ruyter highlighted that commercial customers were charged in excess of 80 percent mark up by the municipality and Nersa as the regulator said and did nothing about this.”

Mosikare stated that businesses were being overcharged while households would now also bear the brunt of overcharging.

“An article published on May 27 on News24.com where De Ruyter was interviewed pointed out that the Sol Plaatje Municipality charges a mark up of 121 percent on the price of electricity for commercial customers. Again this is met by silence from the regulator that suggests that the increases have been endorsed. The municipality is being allowed to price with impunity at the detriment of the city where business leave and people are left without jobs.”

He stated that in 2017 Nersa issued directives to the municipality to attend to the high energy losses instead of increasing the tariffs.

“By then the electricity losses where 24,1 percent and has since risen to 26, 8 percent while the cumulative electricity losses is well above 100 percent over the past five years. In 2021 Sol Plaatje municipality could have purchased electricity from Eskom with the funds lost in the past five years due to among other challenges negligence and maladministration of the electricity concern by the municipality.”

Mosikare believed that it was unlikely that Nersa would accept losses incurred of R122, 5 million due to calculated administrative charges.

“This is equal to 94 percent of own costs excluding Eskom whereas overhead costs should not be more than 30 percent. The revenue requirement shows that the current tariff levels are low. Based on this and all the adjustments it is clear that the current Sol Plaatje tariffs do not recover the Nersa formula revenue requirement. The big problem with this situation is the massive non-payment and thus the actual revenue should be much higher. With such high losses Nersa will not accept any additional price increase.“

He added that once the budget and cost of supply report was approved households and businesses would be further punished for the municipality’s inefficiencies.

“The municipality changed the tariff structure in 2019 without an approved cost of supply study and intends doing so now by approving the budget which contains changed pricing structures prior to Nersa approving the tariff changes.”

The municipality indicated that it would provide a response soon.

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