The More Electricity You use the Higher the Rate You Pay

The More Electricity You use the Higher the Rate You Pay

Private Property South Africa
Anna-Marie Smith

Cape Town residents now have an incentive to save electricity. When electricity tariff increases come into effect on 1 July, the City of Cape Town’s re-designed residential electricity tariff structure will serve to incentivise Capetonians to reduce consumption.

The city’s current Domestic Low and Domestic High tariffs will be replaced with a single two-step block tariff previously - the service charge that formed part of the Domestic High tariff now falls away- and another tariff block has been added to the Life Line block tariffs. This will translate into a gradual, progressive increase in the cost of electricity as consumption increases. The service charge that formed part of the Domestic High tariff, which was a daily charge that added up to the same amount over each 30-day period, also falls away with the new 2011/2012 block tariff structure. The benefit will be passed on to those who consume less than 450 kWh per month, who will receive 50kWh Free Basic Electricity (FBE) as part of the first 150kWh received per month.

As a result of the City of Cape Town having to pay more to Eskom for electricity from July, the City has increased its electricity tariffs. However, the city will not increase tariffs to Eskom’s full 26,71% but has instead undertaken to keep the average increase to its residential electricity customers at 19,94%. This will result in most residential customers seeing an increase of less than 19,94%, while those who using in excess of 1000 kWh per month will be subject to above-average increases.

Property owners and those renting properties in the Cape Peninsula should note that the tariff increases affect only City of Cape Town electricity users, and not residents who fall in the Eskom distribution areas. These areas include parts of Table View, Durbanville, and Khayelitsha, which have already been subjected to increased tariffs in April this year.

The City says it is possible to purchase more than 450kWh in any given month on the Lifeline tariff, and still receive the FBE portion. It’s only when the 12 monthly average receipts exceed 450kWh per month, that the FBE falls away and the customer is shifted to the Domestic tariff. Electricity increases can be seen in the current price of the Domestic Tariff for 450kWh costing R478.66 and will cost R551.12 from 1 July, and 750 kWh now costing R797.78 will rise to R936.71, and 1000kWh now costing R1 063 will rise to R1 273. In addition, when electricity is purchased as prepaid or on credit, the system will automatically charge the first 600 kWh (units) per month at 122,47c/kWh, and 134,59 c/kWh for units exceeding that.

For those under the impression that buying large amounts of electricity may present savings, the city’s surcharge on pre-paid purchases are calculated based on monthly consumption, and bulk purchases therefore do not necessarily amount to any savings.

Other programs to be undertaken at Cape Town’s Electricity Department during the current financial year will include additional projects such as the electrification of new areas, the eradication of the electricity infrastructure backlog, refurbishment and renewal of electrical networks, installation of prepaid meters, provision of new electricity infrastructure, and the provision of public lighting and repairs.


Found this content useful?

Get the best of Private Property's latest news and advice delivered straight to your inbox each week

Related Articles

Residential sectional title sales again on the rise
Sectional title property market in South Africa has recorded increased business activity rising from 13% of total sales in 2005 to nearly 28% in 2020.
Should bond equity be used for debt?
Paying off debt requires a careful consideration of important factors such as interest rates and sources of finance. Should using equity be considered?
Young buyers are dominating the property market: What are their expectations?
The property market has continued to record an increased number of young buyers. What type of dynamics are behind this shift?
Opportunity in a time of Covid-19
The Covid-19 pandemic has adversely affected various business sectors but has also opened up some interesting opportunities.