City Electricity Tariffs Set to Increase on 1 July

Electricity tariffs in the City of Cape Town area of supply will increase on 1 July 2006 by an average of 4.9%. The tariffs have been adjusted to cater for complaints received concerning the daily service charge. This means that some customers will see an increase as low as 0.8% while others will see a once-off increase that is higher than the average adjustment.

The increase will affect the Domestic Tariffs as follows:
Domestic High Consumption: (Now most suitable for consumption above 600 kW.h/month)
Service Charge: Increases from R1.28 per day + VAT = R1.46 per day to R1,99 per day +VAT = R2.27 per day
Energy Charge: Increases from 29.19 c/kW.h +VAT = 33.28 c/kW.h to 30.50 c/kW.h +VAT = 34.77 c/kWh

Domestic Low Consumption: (Now most suitable for consumption below 600 kW.h/month)
Energy Charge: Increases from 40.34 c/kW.h + VAT = 45.99 c/kW.h to 40.65 c/kW.h + VAT = 46.34 c/kWh

RED 1/Cape Town Electricity Services has listened carefully to customers requests and as of 1 July customers using between 450 and 600 kWh per month will no longer pay the daily service charge.

In order to more accurately target the indigent customers and to reduce the estimated cost of the free basic electricity from R130 million to R105 million in the 2005/06 financial year, Council resolved to reduce the limit for the allocation of the free basic supply from 500 to 450 kWh per month. From 1 July 2005 approximately 70 000 customers who were no longer eligible to receive the free basic supply , and would have seen an increase in monthly electricity costs of up to 17 % , were therefore automatically converted from the Domestic 2 (Low Consumption) to the Domestic 1 (High Consumption) tariff, as this was cheaper for them at that time.

Numerous complaints were received from customers who felt that the daily service charge, applicable to the High Consumption tariff, was inconvenient, particularly if they wanted to "top up" their prepaid electricity a few days before making their usual large purchase.

In response to these complaints, and after in-depth analysis, discussion and interaction between councillors, the Total Municipal Account Project Team and the RED 1 Board, Council resolved to revert to a domestic tariff structure similar to the structure in operation prior to July 2005. This means that, with effect from 1 July 2006, all customers using between 450 and 600 kWh per month on average, measured over the 12 months prior to June 2006, will automatically be converted from the current Domestic High tariff to the new Domestic Low tariff, which does not have a daily service charge[ but a higher energy charge than the Domestic High tariff]. These customers will not receive the free basic supply of electricity.

Customers charged at the Domestic Low tariff, and using less than 450 kWh per month on average, will continue to receive the free basic supply of 50 kWh per month. The 450 unit limit is much higher than the 150 unit limit contained in the National Guidelines.

The Domestic 1 (High Consumption) tariff consists of a fixed cost and a variable cost. The variable cost is the energy charge and reflects the actual usage. The fixed cost is a daily service charge and reflects the operating costs of providing electricity to domestic customers and includes salaries, maintenance and support services. The daily service charge is payable regardless of whether electricity is used or not. In the case of a prepaid purchase, the vending system calculates the daily service charge by counting the number of days that have passed since the customer's last purchase and multiplying the total with the daily service charge. The service charge is deducted first, whereafter the balance of the tendered amount is converted to units.

The Domestic 2 (Low Consumption) tariff does not have a service charge.

The table below demonstrates the effect of the tariff increase at the most beneficial tariff (please note that the monthly account values include VAT):

Energy Consumed (kWh)	Tariff	2005/06 Monthly Account	2006/07 Monthly Account	% Increase
50*	2005/06 and 2006/07: Domestic Low	R0.00	R0.00	0.0%
250*	2005/06 and 2006/07: Domestic Low	R91.98	R92.68	0.8%
450*	2005/06 and 2006/07: Domestic Low	R183.96	R185.36	0.8%
500	2005/06: Domestic High 2006/07: Domestic Low	R210.81	R231.70	9.9%
600	2005/06 and 2006/07: Domestic High	R244.09	R277.67	13.8%
750	2005/06 and 2006/07: Domestic High	R294.01	R329.82	12.2%
1000	2005/06 and 2006/07: Domestic High	R377.21	R416.75	10.5%

* Includes 50 kWh free basic energy

The table below illustrates the beneficial effect of the automatic conversion to Domestic Low for customers using between 450 and 600 kWh per month.

Energy Consumed (kWh)	Tariff	With NO conversion to Domestic Low	With AUTOMATIC conversion to Domestic Low	% Decrease
500	2006/07 Monthly Account	R242.90	R231.70	-4.8%
550	2006/07 Monthly Account	R260.28	R254.87	-2.1%

For queries please contact any of the City's call centres for assistance.

Issued by :
Charles Cooper
Media Liaison Officer
Tel: 021 400 371