Western Cape Business News

Send  Share  RSS  Twitter  05 Apr 2010

ELECTRICITY: Chamber Complains About Increase


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THE City Council’s plan to increase electricity tariffs by an average of 24.6 percent as announced last week was unreasonable and unacceptable, says the Cape Town Chamber of Commerce.

The National Energy Regulator recommended an increase of only 15.3 percent for municipalities,” said Albert Schuitmaker, Acting Director of the Chamber. “Johannesburg has managed to keep its increase to an average of 18 percent and so has Durban and Port Elizabeth.”

Schuitmaker said the Johannesburg increase came after an average increase of nine percent last year while in Cape Town the increase had been 31 percent.

The new increase is contrary to NERSA’s recommendations and completely out of line with increases in other major cities and we would like to know why?” he asked.

He said it was important to understand that between one third and one half of the retail cost of electricity was for the energy which the City bought from Eskom. The remainder of the cost was for distribution and the profit the City made on the sale of electricity.

We understand that municipalities will have to pay Eskom nearly 29 percent more for the energy they buy but the City’s own or internal costs of distributing power have not gone up by this amount. In fact, the increase in distribution costs should be in line with inflation and that is about six percent. When these increases are combined the increase in the average electricity cost should be something like the 15.3 percent NERSA recommended.”

The bottom line is that Eskom has increased the price of energy by about eight cents a unit. If the city increases average tariffs by 24.6 percent we will be paying something like 25 cents a unit more for electricity and that is just not acceptable.”

He said the chamber understood that industries which used large amounts of electricity should expect increases more in line with Eskom increases as energy charges formed a much greater portion of their bills. However this was not the case for small business and domestic consumers.

We feel that small business and domestic consumers are being treated unfairly,” he said.


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