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The City of Cape Town intends to introduce fixed charges for water and electricity through its draft budget for 2019.

The City of Cape Town’s Mayoral committee member for finance Johan van der Merwe said the drought crisis has had the most impact on the proposed budget, alongside affordability and financial sustainability.

The total proposed budget for the new financial year that starts in June is R49.1 billion ($4 billion), made up of an operating budget of R39.7 billion ($3 billion) and a capital budget of R9.3 billion ($762 million).

According to News24, the City was proposing a 26.9% increase in both water and sanitation tariffs, 8.1% for electricity, 7.2% for rates and 5.7% for refuse tariffs.

Officials stated that there had been a reduction in income as a result of residents using less water during the drought, and many households reducing their energy consumption.

“The City makes no profit from the sale of electricity, water, sanitation provision or from rates income,” said Van der Merwe. “Whether you use more or less, it costs the City the same to provide it.”

Fixed charges for water

Like other municipalities, the City wants to introduce a fixed charge for water, based on the size of a household’s water meter, in addition to charging them for whatever water was used.

The fixed charge will to cover the costs of reticulation/supply. Read more: City of Cape Town scoops green bond of the year

“Most domestic dwellings have a 15mm pipe size. Based on that they will have a R56 ($4.74) charge [per month excluding VAT],” said mayoral committee member for informal settlements, water and waste services and energy Xanthea Limberg.

The largest meter size of 300mm would incur a R22,500 ($1,905) charges per month excluding VAT, if implemented.

“It’s important to note that even though it may appear to be completely new within the context of Cape Town, this fixed charge has already been introduced in multiple municipalities in the Western Cape and in South Africa,” Limberg said.

Where the City had stepped its water tariffs in six categories, it now wanted to reduce them to four categories (with the first step being 0-6000kl use and the top step being any usage above 35kl).

Price plan for electricity

With electricity, there is a proposal for homeowners with properties valued at R1 million ($84,686) or more to pay a new service charge of R150 ($12.7) per month including VAT.

This service charge is to cover the maintenance of the network and investment in wires.

These homeowners would be placed in a new category called the “home user” and subject to slightly lower energy rates than the “domestic user”, whose property was valued between R400,000 ($33,874) and R999,999 ($84,680).

The “lifeline user” would remain a category for those with a property valued at less than R400,000. Other exceptions for indigent, disabled and rebated tenants also applied here.

“As we are seeing a greater uptake of renewable energy, customers within the domestic band have slowly reduced energy consumption and this has placed a burden on the municipality,” explained Limberg.

African Utility Week