The Driving Factor
In the wake of an eye-popping 18.65% increase permitted by the National Energy Regulator of SA (Nersa) for the new financial year, City of Johannesburg mayoral committee member for finance, Dada Morero, pins the recent tariff surge in Johannesburg mainly on Eskom’s tariff hike.
Morero conducted a workshop on Wednesday to delve into the mathematics behind the new rates and how they align with the R80.9 billion budget for 2023/24.
New Tariffs on Essential Services
Key services have seen tariff increments, including:
- Electricity surging by 14.97%
- Property rates increasing by 2%
- Water and sanitation both rising by 9.3%
- Refuse collection fees up by 7%
According to Morero, the energy cost increase impacts virtually all services. The more expensive electricity becomes, the higher the costs borne by entities such as Joburg Water, which needs power to pump water to reservoirs and homes. With the growing unreliability of power, alternative infrastructure investments are necessary to maintain service continuity.
Morero emphasized the City’s understanding of the financial pressure residents face due to factors like low economic growth, unemployment, load shedding, and the ongoing aftermath of the Covid-19 pandemic. To soften the impact, the City is striving to subsidize more residents who cannot bear the high costs of municipal services, considering the City is already buying bulk services like electricity and water at steep prices.
Morero stated, “As more than 75% of City Power’s operating budget is attributable to bulk purchases cost, it is the most significant driver of City Power’s operating budget.” For the financial year 2023/24, City Power has a bulk purchase cost of approximately R16.4 billion, post the Nersa increase.
Listening to the Community
The City has taken to heart the concerns voiced by residents during the Integrated Development Plan meetings. As a result, the property rates increase stands at 2% instead of the initially proposed 5%, following suggestions from the Treasury and the public.
Aiding Low-Income Homes and Pensioners
Morero outlined several provisions made for low-income households and pensioners:
- All residential properties under the R300 000 threshold are exempted from paying rates.
- Residents will receive 6 kilolitres of free water.
- Properties valued at R350 000 and below won’t have to pay waste charges.
Pensioners also benefit from further property tariff relief. Those aged 60 and above with a gross monthly household income less than R11 904 and property valued up to R1.5 million qualify for a 100% rates rebate. If the income is between R11 904 and R20 404 with a property value up to R1.5 million, they qualify for a 50% rates rebate. Rates will be levied on property values exceeding R1.5 million.
Pensioners over 70 qualify for 100% rates rebate for property valued up to R2 million.
Customers returning excess energy to the grid through approved generator-use-of-system will be rewarded with specific tariffs.