A Power Struggle: eThekwini’s Electrical Grid on Shaky Ground as Nersa Denies 18.5% Tariff Hike

eThekwini Faces Fragile Grid After Nersa’s Refusal

eThekwini Metro recently announced its concerns about the future health of its electrical grid. This worry follows the National Energy Regulator of South Africa (Nersa) denying its proposal for an 18.5% electricity tariff increase. According to city manager Musa Mbhele, Nersa gave the green light for a significantly reduced tariff increase of 15.1% for the 2023/24 period, a decision the city grudgingly accepted.

Reduced Tariff Hike: A Precarious Path

Lindiwe Khuzwayo, eThekwini spokesperson, shed light on the dire straits this lower tariff hike places the city. Over the past half-decade, electricity sales have taken a nosedive, she noted, attributing it to several factors like economic downturn, and the ripple effects of recent unfortunate events.

Confluence of Disruptions

These included the shuttering of businesses in the city due to the Covid-19 pandemic, the chaos of the July unrest, and the devastating April 2022 floods. Khuzwayo pointed out these events affected customer affordability, translating into decreased sales. The negative impact of load shedding and difficulties in paying municipal bills by customers further dented the city’s sales.

Also, a significant shift to solar energy as a response to high electricity prices added another dimension to the issue.

Budget Constrictions and Nersa Benchmarks

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The city had to make budget cuts to align with Nersa’s benchmarks, Khuzwayo added. The crux of the matter is that while revenue dwindles, fixed costs such as the Eskom bulk tariff, salary costs, etc., stay the same or even increase.

This situation pushes the city into a corner where it must grapple with decreased investment in infrastructure, possibly resulting in increased outages and more damage to the fragile infrastructure due to load shedding, especially following the floods.

A Tough Balancing Act and the Affordability Factor

Khuzwayo describes the city’s budget as a challenging equilibrium between affordability and sustainability. The city strived to minimize the tariff increase, mindful of the prevailing economic climate and consumers’ struggles. The brunt of the impact, she warned, would fall on the poor, as the city would essentially be providing electricity at cost.

Tackling Corruption and Mismanagement

Addressing questions about increased electricity costs due to corruption, Khuzwayo reassured that the city maintained a zero-tolerance approach. She highlighted the city’s strides towards clean governance, including actions against many officials, consequence management, and an independent financial misconduct board.

Recent actions include the recovery of over R24 million from employees linked to irregular expenditure. Khuzwayo also assured of ongoing measures, such as reviewing and strengthening internal controls and benchmarking costs for transparency.

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eThekwini’s Corruption Quagmire

However, the eThekwini metro hasn’t been free from allegations of corruption in recent years. From charges against former mayor Zandile Gumede to supply chain discrepancies during the April 2022 floods, the city has seen its share of mismanagement.

The latest blow comes from a report by forensic audit firm Nexus, revealing the city’s significant cash loss due to fraudulent overtime claims. According to the report, five municipal departments spent a whopping R3.6 billion on overtime pay in five years, even to employees who did not qualify for it, a direct contravention of labour laws.

The electricity department was among those racking up overtime pay until 2022, the Nexus report and others revealed. As eThekwini grapples with these financial and management challenges, the city’s electrical grid remains at risk, caught between the city’s needs, customer affordability, and regulatory benchmarks.