Johannesburg, South Africa — ESI-AFRICA.COM — 28 July 2011 – The National Energy Regulator of SA (NERSA) has been informed that Johannesburg’s City Power has a mark-up of 117% on electricity it obtained from Eskom and resold, and that this was much higher than other cities in the country and presented a threat to the manufacturing industry.
Reporting this development, Business Report said a director at Scaw Metals, Markus Hannemann, had warned that if the City of Johannesburg’s electricity tariffs continued to increase at current rates, its factory in Johannesburg would close. He said the factory employed 1,100 people and provided steel wire ropes throughout the world, largely to the mining industry.
The latest proposed tariff increases by City Power would add R9.2 million to Scaw Metals’ annual electricity bill, according to Hannemann, and only R4.3m of that increase was required to cover Eskom’s tariff rise, while City Power was making an additional almost R5 million.
He spoke at a NERSA public hearing on an application by City Power to increase its municipal electricity tariff by 27.7%, which is above the NERSA guideline increase of 20.38%.
Hannemann said the 117% mark-up on electricity appeared to be the highest in the country.
The neighbouring municipality of Ekurhuleni had a margin of 56% and Durban had a mark-up of 35%.
A manager at Scaw Metals, Damon Symondson, appealed to NERSA to consider enforcing a zero increase for City Power over the next three years to bring its industrial tariffs more in line with tariffs in other municipalities.
Acting managing director of City Power, Sicelo Xulu, cautioned against making tariff comparisons, but later admitted that no comparative studies of fees in other municipalities had been done.