Use less, pay less in new service charges

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Cape Town homeowners will have faced new charges on their water and electricity bills this month after a new electricity Home User Charge came into effect on July 1.

There is also be a new fixed basic charge for water. The R150 electricity tariff has been introduced by the City of Cape Town in an attempt to “create a higher level of revenue stability” and ensure resources are available for necessary operations and maintenance, including times of reduced water and electricity usage.

“Even if you use little or no water or electricity from the city, the fixed costs of providing electricity and water services remains largely the same,” the city said in a statement.

The charge is a monthly service delivery fee payable by:
*All residential properties valued above R1 million (on the home-user tariff)
*All properties that are supplied via a credit meter, regardless of value.

The charge was initially proposed in the 2017/2018 budget, but Xanthea Limberg, the city’s mayoral committee member for informal settlements, water and waste services, and energy, says it was delayed by a year.

“Following the public participation process and objections received to the proposed service charge, the Cape Town Council decided not to implement the tariff in the originally proposed year, but to perform further customer education and awareness through the 2017/18 financial year, prior to implementing it in the 2018/19 financial year.”

The amount first proposed was reduced from R251.85, but after the public participation process, it was lowered to make it “more palatable” against the backdrop of other necessary service fee increases, such as water and sanitation, as a result of the drought.

“The city had to keep the overall increases to the bouquet of council services within or near inflation,” Limberg said.

The figure of R150 followed a “complex tariff calculation” that took into account all factors that would influence a balanced budget based on expected revenues, customer categories and expenditure.

“Over and above these factors, the city looked at the customer impact, specifically at those that are lower consumers of electricity in the applicable property value bracket.

“By keeping the service charge at a relatively low introductory value, the overall rand value increase was kept as low as possible, while still accomplishing the stated aim of recovering some of the fixed costs from a fixed charge.”

Although the structure of the tariffs has changed, the city says it remains a case of “the less you use, the less you pay”.

Households registered as indigent and residents who qualify for pensioners’ and disabled persons’ rates may be charged at lower rates.

According to the city’s electricity budget documents, homeowners will be charged R150 a month plus an energy fee of about R185.32/kWh for the first 600 units a month, as compared to R210.32/kWh on the domestic tariff.

Under the new charge, residents will pay less per unit for the first 600 units of electricity. This will compensate for the introduction of the service delivery charge.

The document states: “We charge residents one flat rate for the first 600 units they purchase at the start of the calendar month, and then another rate for the units they use after that until the end of the month.

“Residents are advised to purchase only the amount of electricity they need for the month to avoid buying more than necessary at the higher rate. It is not cheaper to buy in bulk. If you buy 600 units at the beginning of the month and then buy more in the same month, you will move on to a higher price band”.

Owners of sectional title properties will be charged this additional amount for every meter point in each property they own, Limberg said.

The water and sanitation fixed basic charge is a monthly amount payable by non-domestic customers and non-indigent residential households based on the size of the meter connection to a property.

These charges for residential properties are based on a sliding scale to encourage water-saving habits.

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