Electricity Tariff

Andrew Layman:  PCB CEO

It is a particularly bad time for industrialists.    The electricity accounts for July are causing considerable panic because they are so much higher than expected.   There are two reasons for this.   One is that the NERSA-sanctioned increase for municipalities was not the 25% generally publicised, but 29%, owing to the fact that municipal tariffs are adjusted from 1^st July (and the leeway between 1^st March and end of June had to be made up), and the other is that the Msunduzi Municipality has introduced a time-of-use tariff.   Eskom customers, including municipalities, have had the benefit of this type of tariff for some time, but it has not applied in Pietermaritzburg until now.    There are two components to time-of-use: one is the high season/low season differentiation, the other relates to the time in a particular 24-hour period when electricity is used.    The high season tariff applies for the three months, June, July and August.   This is three times higher per kilowatt hour (kWh) than the usage tariff for the other nine months of the year.    It is very unfortunate that the high season tariff, which we have not had before, should be applicable at this time.    Manufacturers can control their electricity usage by adjusting production patterns, but, unfortunately, many had too little time to do this before the new tariff was implemented on 1^st July.    The Chamber appealed to the Municipality to delay the implementation or give users a choice of going on to the new tariff for July and August or not.   This appeal was rejected.    While it was disappointing, it was also understandable.   Just as domestic customers must pay so much more for their electricity during winter, municipalities are equally stretched by the demands of Eskom.  In the case of our city, for example, while the average monthly bill is of the order of R42 million, the amount owed for July is R104 million.  If the city were not in such a parlous financial situation the Municipality might have had the money to pay Eskom and give industrialists the break that they sorely need.  

The PCB is confident that the revised tariffs are a significant improvement on the previous ones.    Business asked for time-of-use to give it the flexibility to save on costs, and it had been shocked by the inordinately high so-called demand charge which in the case of Pietermaritzburg was of the order of 435% higher than Eskom was charging.  The new tariffs have achieved a far better balance between usage and demand charges.    Careful calculation will reveal that, while the winter accounts are impossibly high, there will be an evening out across the year as a whole.   However, July’s account with its very nasty and unexpected shock, has to be paid now and one very angry industrialist commented that his company was being expected to subsidise a bankrupt city, and so it may appear.   This company, and others too perhaps, will seriously considering relocating (they may not find much cheaper electricity elsewhere) or shutting its doors.

At the time of writing, municipal task teams have been searching for, and finding, illegal electricity connections in the business precincts of the city.    I have heard a figure of up to 60% of businesses visited by inspecting task teams mentioned as the number where electricity has been stolen.   This is appalling and must fill all right-minded people with righteous indignation.   Over a long time, theft from government or the power in authority has become somewhat acceptable in many quarters.    Consideration of who the victims of such theft actually are, however, puts the matter in a different light.   They are not the people responsible for government, but the rest of society, particularly the poor and jobless whose deprivations increase as government funds diminish.   A company hit suddenly with a huge bill, the payment of which cannot be delayed because the Municipality has to honour its commitment, is actually being called upon to subsidise the thieves.   These unscrupulous people are not paying for their electricity usage, and they are actively stealing the resource.  This will, if it hasn’t done so already, lead to people losing jobs and, possibly, the closure of factories.   The Chamber is ashamed that these are members of the city’s business community.                                                                                    

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