The National Energy Regulator of South Africa (Nersa) has approved a 13.07% average tariff increase for the City of Tshwane Municipality.
“The regulator confirmed that it approved a 13.07% average tariff increase for the City of Tshwane Metropolitan Municipality for the period 1 July 2019 to 30 June 2020. The approval follows a public hearing held on 11 July 2019 to consider the application by the City,” said the regulator on Friday.
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The approved tariff hike has been implemented from 7 August 2019.
“The city must ensure that all tariffs charged from 1 July 2019 comply with Nersa’s decision of 7 August 2019,” said the regulator.
The decision follows on the regulator’s public hearing into the City’s 13.07% tariff application and restructuring of its tariffs that was held in July.
In April 2019, Nersa called for comment on the municipal tariff guideline, benchmarks and proposed timelines for the municipal tariff approval process for the 2019/20 financial year.
Nersa must approve an annual percentage guideline increase for municipalities, as municipalities require this before they draw up their applications for new tariffs, which are submitted to Nersa.
Tariff hike determinations
In its decision, the regulator further decided not to approve the revised tariff structures because the city did not comply with the requirements of the Electricity Pricing Policy.
Three additional determinations were decided:
1. Not to approve the following tariff structures:
• Introduction of basic charges for domestic and agriculture customers.
• Introduction of demand charge for domestic bulk customers.
• Introduction of seasonal tariffs for C&I and domestic customers.
2. The City must maintain the current structure and increase the tariffs approved for the 2018/19 financial year by the approved guideline increase of 13.07% for implementation in the financial year 2019/20.
3. The City must undertake the cost of supply study to comply with the Electricity Pricing Policy (Policy Position 23) requirement relating to the change in the municipal tariff structure.
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What is Policy Position 23?
Policy Position 23 states that: “Electricity distributors shall undertake Cost of Supply studies at least every five years, but at least when significant licensee structure changes occur, such as in customer base, relationships between cost components and sales volumes. This must be done according to the approved Nersa standard to reflect changing costs and customer behaviour. The cost of service methodology used to derive tariffs must accompany applications to the regulator for changes to tariff structures.”
Source: SANews.Gov.za and edited by ESI Africa