Cape Town’s Cost of Living Crisis Worsens with Hefty Electricity Tariff Rise

Impact of Rising Electricity Tariffs

Cape Town – The increasing cost of living in Cape Town, already a major burden for many, is about to get worse. As of July 1, municipal consumers are feeling the pinch of new electricity tariffs, representing a staggering 17.6% hike.

According to the City, the new rates and tariffs will start reflecting in the July billing cycles. They noted, “The electricity tariff is primarily driven by the Eskom increase. Some 70% of the City’s electricity tariff income is spent on buying the bulk power from Eskom.”

Interestingly, the City has advised its customers to purchase prepaid electricity in smaller quantities, as buying in bulk does not provide any cost advantage.

Tariff Hike Breakdown

Essentially, the tariff increase implies that the cost of 150 units of electricity, which was R161.90 as of June 30, is now R190.40. This applies to consumers on the Lifeline tariff, the City’s “special, highly subsidized tariff intended to provide relief to prepaid customers with limited means”.

For consumers under the Domestic tariff, receiving more than 450kWh per month on a 12-month average, and having a municipal property valuation between R500 000 and R1 million, the impact is no less significant. The cost of 250 units of electricity that was R745.75 before the hike is now R877.

Home users with a municipal property valuation of R1m and above are not exempted. The cost for 250 units of electricity has risen from R869.85 to R1 023.54 following the 17.6% hike.

Outrage Over the Hike

Stop CoCT founder Sandra Dickson expressed concern, stating, “The tariff increase has yet to hit people’s pockets, but many were already just squeaking by.” She criticized the City’s sudden rise in property rates, deeming it criminal.

Francina Lukas, a Khayelitsha Community Police Forum member, commented, “With the current high cost of living, this increase will affect most people negatively. Those in the lower income groups already feel the pinch of paying too much.”

Silver Lining Amid the Storm

In the midst of this financial crunch, there is a glimmer of hope. This week, analysts are predicting a decrease in petrol and illuminating paraffin prices for the second consecutive month, effective from Wednesday.

FNB chief economist Mamello Matikinca-Ngwenya stated, “Load shedding and sustained high food inflation are probably of primary concern to low- and middle-income households. But sharply lower paraffin prices and the extension of the jobs recovery in the services sector may cushion the impact on less affluent consumers.”