Cape Town - The City of Cape Town has banded together with residents and businesses to reject a proposed electricity price hike of up to 44% that would further cripple already cash-strapped families.
The tariff hike, which could be implemented as early as April 2025, spells disaster for consumers when the economy is failing millions of people, concerned parties added.
In a letter addressed to the National Energy Regulator of SA (Nersa), Mayor Geordin Hill-Lewis expressed the municipality’s opposition to the increase.
“This is a mammoth Eskom increase that Nersa must stop in its tracks. It is unthinkable. On behalf of Cape Town households and businesses, especially small businesses, we are calling for the rejection of a 44% electricity tariff hike.
“The economic impact, and also the impact on especially lower-income families, will be immense with the cost of living already so high,” Hill-Lewis wrote.
He noted that Eskom had yet to formally submit its application to Nersa, but early consultations showed their intention was to ask for a 44% hike for electricity sales to municipalities, and a 36% hike for direct Eskom customers.
Nersa said once Eskom submitted its final application, it will consider it according to the regulator’s processes.
It comes as Nersa announced earlier this month that it granted Eskom’s application to retrospectively recover R8 billion through its Regulatory Clearing Account for the 2021/22 financial year, signalling tariff increases for consumers in 2025.
“Once the final application has been submitted, Nersa will consider the application, and diligently adhere to Nersa’s regulatory processes. These processes include publishing the application on the Nersa website, conducting a thorough public participation process that involves inviting stakeholder and public comments, and conducting public hearings,” said Nersa.
President of the Cape Chamber of Commerce and Industry, Jacques Moolman, said the request for the hike should be “dismissed with the contempt it deserved”.
“A hike of this magnitude is laughable and an insult to small business operators who are either in financial distress or working with minuscule profit margins.
“In many instances, electricity is a major input cost, and as some commentators have pointed out, the tariff has already increased by around 450% since 2007.”
Moolman said while the hike was a tricky equation, weighed on revenue versus livelihood, the government should be looking at ways to incentivise small businesses.
“Under current circumstances, with the economy constrained, Eskom and its partners need to look at other ways of balancing the books.”
Concerned public body, Electricity Tariffs Must Fall founder, Natasha Gertse, said the tariff hike will create bigger holes in an already suffering consumer’s pocket.
“Currently we are not even surviving, we are on load shedding even when there is no load shedding.
“We try to save on electricity costs wherever we can, because R50 only gets you 12 units, imagine what a hike like this would mean to the consumer.
“These energy regulators are not looking at the suffering, they are just looking at the revenues.”
Gertse said the price hike would not only affect people who earned on the lower scale.
“This is an overall feeling. It does not matter if you earn more, this hike will still hit hard, it’s an overall issue that should be stopped dead in its tracks.”
Willie Cilliers, chairperson of Business Western Cape, a non-profit company that promotes the economic and business interests of its members, labelled the hike a disaster for businesses.
“Businesses are already struggling to survive in an economic climate that is not good at the moment. Part of growth is job creation, we know unemployment in the Western Cape is lower than the rest of the country, but if you look in certain sectors, especially smaller towns outside Cape Town, there are huge unemployment figures, up to 90%, so we look at how this will affect the businesses in job creation too, it will be a massive disaster.”
General manager of the National Association of Social Housing, Karabelo Pooe, urged the government to consider alternatives for the social housing sector.
tracy-lynn.ruiters@inl.co.za