Households with a property value under R500 000 pay the least for electricity in Cape Town compared to SA’s other cities in 2023/2024. The City of Cape Town is also the only metro to decrease electricity tariffs for ‘lifeline’ electricity customers this financial year, helping to shield struggling households from Eskom’s 18,5% tariff hike. View a metros comparison here.
Lifeline customers using 450 units in a month, will see a 5,1% decrease in their electricity bill in 23/24 (R48,27 saving). Those using 600 units receive a 18,4% decrease (R275 saving) compared to last year, while a 12-month average usage of 450 units applies to stay on Cape Town’s lifeline tariff.
This is in contrast to other cities, where residents on lifeline-equivalent tariffs will generally experience a 15,1% increase to their monthly electricity bills.
For 450 units bought in a month, Cape Town lifeline customers pay R252 less compared to Joburg, and R437 less compared to Durban. This is based on a customer with a property value of R500 000, or monthly income of R7 500, with Cape Town the only metro offering a free basic electricity allocation all the way up to these thresholds (25 – 60 units depending on usage).
This year, Cape Town also raised the number of units that can be bought at a cheaper, subsidised rate, from 350 to 600 units per month on the lifeline tariff. This will especially help households using more in winter.
Comparing the indigent policies of various cities on Free Basic Electricity and subsidised tariffs, Cape Town has SA’s Highest:
- Property value qualifying threshold: R500 000
- Monthly household income threshold: R7 500 (if property value >R500k)
- Pensioner & grant recipient criteria: <R22 500 monthly income
- Subsidised units purchasable: 600 p/m (450kWh 12-mth avg)
For larger home electricity users with properties valued over R1 million, 600 units of electricity generally costs similar in Cape Town compared to most other cities (around R50 – R100 difference), and significantly less than Joburg.
On the Cape Town Home User Tariff, 600 units cost R312 – R575 less than Joburg’s equivalent tariffs. With VAT and all fixed / per unit costs taken into account, 600 units cost R2103.57 on Cape Town Home User vs R2416 [JHB Domestic 1-phase] or R2678 [JHB Domestic 3-phase].
Cape Town customers further benefit from major electricity infrastructure investment, reliable service delivery, and SA’s most advanced plans to end load-shedding and Eskom reliance over time. Cape Town already provides up to two stages of load-shedding protection, with plans to protect against the first four stages of Eskom’s load-shedding by 2025/26.
Speaking in City Council on Thursday, 24 August, Cape Town Mayor Geordin Hill-Lewis said the City has ‘fought tooth and nail against massively above-inflation Eskom tariff hikes year after year on behalf of South Africans who should not have to shoulder the costs of corruption, state capture, and mismanagement of Eskom’.
‘Of all South Africa’s cities, Cape Town offers the most protection for struggling households, and is leading on ending our reliance on expensive Eskom power while investing in reliable electricity services and infrastructure.
‘It is important to highlight the rank hypocrisy of political parties who are protesting about electricity tariffs on Saturday, not at the Eskom offices, not at the ANC offices, but at the offices of the one City doing the most to protect poorer households from Eskom, and break their power monopoly over us.
‘The record will show that these political parties and their allies have never made use of public participation or their cosy positions in national government to oppose Eskom’s increases and NERSA’s approval of 18,5%.
‘They have also never fought in other towns and cities where they govern for the same protections that we are providing in Cape Town, including raising qualifying thresholds for lifeline electricity, raising the number of subsidised lifeline units that can be bought, and dropping the price of lifeline electricity, like we did in Cape Town this year.
‘Our promise to residents is that Cape Town will never stop fighting for you, including fighting to oppose Eskom’s tariff hikes on every available platform, protect struggling households, end load-shedding and Eskom reliance over time, and deliver reliable services and infrastructure for residents of Cape Town,’ said Mayor Hill-Lewis.
NERSA recommendation would cause R500m deficit
The City has been able to reduce Eskom’s 18,49% increase to 17,6% for residents, and is the metro offering the most comprehensive protection for subsidised lifeline customers while funding plans to end sole reliance on expensive Eskom power as soon as possible.
Cape Town leads SA’s cities in the race to end load-shedding, with advanced plans to protect against the first four stages of Eskom load-shedding by 2025/26.
The City is also making unprecedented investments in electricity infrastructure maintenance and upgrades, worth R3,95bn over the next three years. On service delivery, around 80% of electricity outages are fixed in under 3,5 hours for City-supplied electricity customers, and 99,9% of all faults are fixed within national Quality of Service timeframes.
From the City’s tariff, 70% is used to buy bulk electricity from Eskom, with the remainder for reliable services and investments to end load-shedding and buy more affordable power on the open market.
Having approved an 18,5% Eskom hike, Nersa’s recommendation of 15,1% for municipalities is not sustainable for the City of Cape Town, and would lead to a shortfall in excess of R500 million for 2023/24 alone. This would place service delivery and the ending load-shedding programme at severe risk while bringing minimal relief at an individual household level (four cents per unit for lifeline customers and 8c per unit on the Domestic tariff).
Nersa’s tariff benchmarking methodology has already been reviewed and ruled unlawful in two High Court judgments. The City has further taken Nersa’s 22/23 and 23/24 tariff decisions on judicial review, with these processes ongoing.
In terms of the Electricity Regulation Act, Nersa must allow an efficient utility to recover its costs, but it has not made a rational, lawful decision on the City’s application for 17,6%, driven by the 18,5% Eskom increase. The City awaits sight of Nersa’s new legally compliant method for recommending municipal tariff increases, which the courts have ordered to be in place by later this year.
Source: City of Cape Town
