Social unrest warning over new electricity prices

Energy analyst Chris Yelland warned that the high prepaid electricity price increases in Johannesburg are dangerous and may increase the risk of social unrest.

This warning followed the City of Johannesburg’s increase in prepaid electricity prices for poor households by six to twelve times the inflation rate.

“City Power’s prepaid electricity prices are 76% to 49% higher than those of Eskom, in the range of consumption considered,” Yelland said.

City Power is 100% owned by the City of Johannesburg and is responsible for most of the electricity distribution and retail sales in Johannesburg.

The prepaid electricity price increases of 61% to 33% are 47 to 20 percentage points higher than those of Eskom in the range of consumption considered.

“City Power’s prepaid electricity prices and price increases hit low consumption, and therefore poorer prepaid electricity customers, much harder than those with higher consumption.”

Yelland did an in-depth analysis of the latest electricity price increases in Johannesburg for the current financial year.

City Power’s prepaid electricity tariff rates for the small minority of indigent households are 16% and 26% more expensive than Eskom’s prepaid electricity tariff rates.

However, the large majority of City Power’s indigent and poor households are not on the city’s indigent register.

Their prepaid electricity tariff rates are 24% and 26%, respectively, more expensive than those of Eskom.

In addition, a fixed charge of R230 per month applies to most of City Power’s indigent poor households.

Yelland said many households with low energy consumption are in situations of extreme poverty and unemployment.

Another problem is the significant disparities between those of City Power and Eskom and between low consumption and higher consumption for indigent and poor customers.

He said this disparity and big increases for poor households are dangerous and may increase the risk of social unrest.

City of Joburg not backing down

The City of Joburg did not back down. Its executive mayor, Kabelo Gwamanda, said the higher rates created fairness and transparency in the city’s electricity tariffs regime.

“The newly introduced electricity surcharge for prepaid customers is the outcome of various council resolutions since 2018,” he said.

“It is intended to provide revenue to fund the city’s investment in new electricity infrastructure and maintenance of existing infrastructure.”

He said following the adoption of the surcharge, the country was confronted by COVID-19 pandemic. As a result, the city postponed its implementation.

“The new electricity surcharge is necessary to create fairness and equality in the city’s tariffs regime,” Gwamanda said.

“Post-paid customers have been paying the surcharge, and only prepaid customers have been excluded.”

The introduction of the surcharge now seeks to end the unfair subsidisation of prepaid customers by post-paid customers.

As required by law, the city undertook a comprehensive Integrated Development Plan (IDP) consultative process in all wards.

It consulted with residents and their representatives prior to the approval of the new tariff by the council.

“There has been some opposition to the surcharge. However, as a responsible government, the city must ensure it optimally uses tariffs,” Gwamanda said.

This was needed to maintain the system and increase its capacity to meet the city’s growing population and economic needs.

“We urge residents to familiarise themselves with the new tariff regime. An added effort is being made to educate the public on the tariff and its implementation,” he said.