Truth about Joburg’s R230 electricity fee by Hanno Labuschagne

[Nat Quinn]

Truth about Joburg’s R230 electricity fee

Hanno Labuschagne

While many Johannesburg residents are up in arms about a new R230 fixed prepaid electricity charge, people in other parts of the country have been subjected to similar charges for years.

The City of Joburg (CoJ) first voted to implement the controversial charge during a council meeting in 2018, with a plan to introduce it in 2019.

However, the tariff’s introduction was delayed for five years due to a combination of factors, including the Covid-19 pandemic’s additional strain on household budgets and news outlets and opposition parties bringing the controversial fee to the public’s attention.

When it finally kicked in on 1 July 2024, the charge sparked outrage among Joburg residents and criticism from civil rights organisations.

Energy expert Chris Yelland’s calculations have shown that the fixed fee makes Johannesburg’s electricity between 49% and 74% more expensive than Eskom’s tariffs for low-usage households.

Some argued that high fixed tariffs on prepaid meters are unjustified as their impact on electricity network administration and maintenance is substantially lower than that of a conventional postpaid user.

Many Joburg residents were motivated to switch to prepaid because the city charges well over R700 in fixed service charges for conventional meters.

Authorities must monitor and audit these meters more to ensure the accuracy of their readings.

The revenue they generate can also only be collected after consumption, raising the likelihood of delinquency.

However, fixed monthly charges for prepaid meters are not uncommon in South Africa.

At least four other major municipalities also implement fixed fees for prepaid customers.

The practice seems to be particularly popular in the Western Cape, including in the City of Cape Town, which has had fixed prepaid charges for years.

The fixed service charge in Cape Town applies to most properties valued over R1 million and is currently R245.03 for both prepaid and conventional customers.

In Cape Town’s property market, this includes homes in the lower end of the middle-class category.

Cape Town at night

Defending the fixed fee

Cape Town argues that the fee covers the cost of maintaining the electricity network and “other costs” that are not dependent on the amount of electricity used.

“The fixed charge is an established part of tariffs, not only in Cape Town but also in the rest of the country, as it ensures that income is stable, irrespective of how much or how little is used,” the city said.

It is debatable whether this is against the Electricity Regulation Act, which states that users’ tariffs must be based on the actual cost of delivering the service, not to guarantee income.

That said, the city has several mitigations to shield poor households from the impact of its fixed charge.

Firstly, it provides a special reduced Lifeline tariff without a fixed fee for prepaid customers with properties valued under R500,000 and a maximum energy use of 450kWh per month.

In addition, those who qualify for an indigent, pensioner, or disabled rebate are exempted from the property valuation criterion. That means that they do not have to pay the fixed fee even if the value of their property exceeds R1 million.

The Domestic tariff for properties valued between R500,000 and R1 million also excludes any fixed service charges, without the household needing to qualify as indigent, and there is no 450kWh usage limit.

Joburg’s indigent register incomplete

Other municipalities with fixed charges for prepaid customers also exempt indigent households from the fees.

That is potentially where the biggest sticking point with City Power’s tariff lies.

Although the CoJ also exempts those on the Indigent Low Usage tariff from the fixed charge, Yelland has pointed out that the city’s register for indigent households contains far fewer people than those who actually qualify as indigent.

The equitable share grant Joburg receives from National Treasury to provide free basic electricity to indigent people provides for about 950,000 households.

Joburg’s own data shows roughly 670,000 households in its area of governance live below the lower-bound poverty line.

However, only about 30,000 households have been registered as indigent and are being exempted from the fixed charge.

With the implementation of the new charge starting in July 2024, City Power is collecting around R211.6 million per month from households that should not be paying the fixed charge.

The table below summarises the fixed prepaid charge policies of 12 of the biggest municipalities in South Africa.

Fixed prepaid electricity charges among major municipalites
City	Fixed monthly service or capacity charge	Exceptions	Collection method
Rustenburg	Residential Town Prepaid — R322.15  Residential Rural Prepaid — R492.48	Residential Lifeline tariffs for indigent households with no basic charge	None explicitly mentioned in the tariff book
Cape Town	Monthly Home User prepaid — R245.03	Properties valued below R1 million OR households qualifying for indigent, pensioner, or disabled rebate	Charged to rates account
Johannesburg	Residential Prepaid High — R230	Households on CoJ indigent register excluded from fixed charge	Deducted from first monthly prepaid purchase
Polokwane	Domestic Supply prepaid — R192.94	None explicitly mentioned in the tariff book	None explicitly mentioned in the tariff book
Ekurhuleni	Tariff B prepaid — R82.04	Alternative Tariff A plan available with higher energy charges, suited for low-usage households	Deducted from first monthly prepaid purchase
East London	None for prepaid	n/a	n/a
Gqeberha	None for prepaid	n/a	n/a
Bloemfontein	None for prepaid or conventional	Optional basic charge of R302.85 on time-of-use tariff plan with feed-in support	n/a
Durban	None for prepaid or conventional	Optional service charge of R71.50 per kVA inverter capacity for feed-in tariff	n/a
Kimberley	None for prepaid or conventional	n/a	n/a
Nelspruit/Mbombela	None for prepaid or conventional	n/a	n/a
Pretoria	None for prepaid or conventional	n/a	n/a

 

source:Truth about Joburg’s R230 electricity fee (mybroadband.co.za)

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