South Africa: City Power to increase tariffs by 7%

NERSA and ESKOM29 June 2014, Tshwane – This follows the decision by the National Electricity Regulator of South Africa (Nersa) to approve its tariff increase application across different consumer segments.

City Power Managing Director Sicelo Xulu said they had applied for variable tariff increases across different segments to the regulator, and have been given the green light to implement the requested tariff increases.

“City Power had requested a 9.3% tariff increase for time of use (TOU) for medium voltage, which the regulator has granted. The utility had also requested a 0.17% time of use tariff increase for low voltage customers, which has also been approved.

“Medium voltage large power users (LPU) will incur an energy hike of 7.41%, while low voltage LPUs will see a 7.37% increase in the price of electricity.

“Conventional commercial users will pay 4.79% more for their energy usage, while commercial pre-paid customers will pay 9.40% more for their energy use,” he said.

Xulu said residents, who are billed using conventional means, will pay 7.36% more for electricity usage, while prepaid customers will pay 7.45% extra for their electricity consumption.

“City Power welcomes the decision by the regulator to approve all the tariff increase applications submitted by the utility. City Power has applied its mind fully to the submissions before it made the application and taken a number of variables into consideration.

“These tariff increases strike the balance between raising the required capital to improve infrastructure to ensure a steady and uninterrupted supply of electricity, and the economic realities faced by hard-pressed consumers,” he said.

Xulu said the lower increase also significantly reduces the pressure on revenue collection, as the more affordable the price of electricity is kept for the broad customer base, the less severe this challenge becomes for City Power.

The utility is currently implementing a pragmatic performance transformation plan that is geared at enabling the organisation to operate efficiently, with a specific focus to meet customer needs.

One of the areas being looked at and earmarked to benefit its broad customer base is tariff hikes and their impact.

City Power is a transmitter of electricity with around 75% of its business input cost attributable to the purchase of power from Eskom.

If this input cost is kept lowered to 8%, the utility would be in a position to keep the tariff increase to its customers low – most likely a figure around CPI plus 2% – slightly below 8%.

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