Responding to criticism over the coming tariff hikes the City says these increases are set at the minimum of what is required to continue and expand services for the people of Cape Town, and especially to enhance energy and water and sanitation resilience.
“No profit is planned for and all income the City receives from rates and tariff increases will go into service delivery, says Mayco member for finance Siseko Mbandezi.
National Treasury required all municipalities to justify all increases in excess of the projected inflation target.
Proposed rates and tariff increases for the City for the 2022-2023 book year are above the lower limit of the 3% to 6% reserve bank target band of CPI inflation and also above the annual inflation rate that stood at 5,7 in Jan./Feb.
Mbandezi says the City’s rates and tariffs remain among the lowest in South Africa.
“The largest increase of 9,5% for electricity is largely Eskom-driven. Earlier this year we called on Nersa to reject Eskom’s application for a 20,5% increase in the price of electricity.
“Some 36 000 Capetonians supported our call in just 48 hours, and we were the metro that led the charge at the Nersa hearings in opposing these unjust, unaffordable increases. While Nersa didn’t approve the full 20,5%, they did still approve an unacceptably high 9,61% increase. The City has tried its very best to absorb this with a 9,5% tariff increase. Unfortunately we cannot absorb any more of the Eskom-driven increase, as we need to ensure sufficient revenue to continue delivering basic services,” he says.
Input given by the City to National Treasury to justify the electricity revenue increase includes the shrinkage in sales growth due to consumers moving towards alternative sources of energy; and the establishment of a generation department to investigate and prepare the directorate for future alternative generation possibilities.
“In addition, the increase in bulk purchases without a concomitant increase in sales income, due to vandalism and theft also play a role as additional security has to be implemented to curb it,” added Mbandezi.
Proposed water and sanitation tariff increases had to make provision for among others the implementation of the City’s New Water Plan which includes initiatives to further invest in the underground extraction of water from aquifers.
Also, says Mbandezi, budgetary provisions had to be made for the water quality of the vlei areas and improving response times for sewerage blockages and reducing these blockages with preventative maintenance.
Furthermore, a specific focus was placed on sewer network replacement as well as the upgrading of sewer pump stations.
