Buffalo City Metro mayor Princess Faku has advised small businesses and post-paid credit metering electricity consumers to instead migrate and switch to prepaid electricity consumption to avoid paying higher electricity surcharges.
Prepaid customers, as of July, will pay a standard monthly “cost of supply” fee of about R370, compared with the R660 charged to post-paid domestic customers.
This led to an outcry from many quarters of the city.
The disgruntled ratepayers felt the charges were unaffordable and had been introduced without proper consultation.
This as the city had in 2024 failed to host its traditional physical budget and Integrated Development Plan (IDP) roadshows, a platform where the city authorities interact with residents before the budget is adopted and tariff hikes approved.
Faku’s advice came after she and her entourage, which included city manager Mxolisi Yawa and some members of her executive, met representatives of the Border Kei Chamber of Business (BKCOB) in East London on Monday.
“Our people must instead migrate to prepaid electricity ... Domestic credit customers can migrate to a [much cheaper] prepayment tariff.
“This is because people are under financial constraints,” Faku said.
Speaking about the introduction of the basic charge, Faku said “it was not an easy call by BCM as the electricity we are consuming is transmitted from Mpumalanga [province]”.
She said the cost of supply study conducted by the city before the increases were introduced, “indicated that BCM tariffs were under cost reflecting by 16.9%”.
“We are operating at a loss because we have indigent people in our metro.
“It is costly for BCM as we transmit from Mpumalanga,” she said.
Metro spokesperson Samkelo Ngwenya said on Monday the metro was doing everything it could to soften the blow.
“The metro has protected most of its close to 150,000 account holders who fall in the prepayment metered domestic customer and domestic indigent customer, where the impact of the electricity tariff increase is estimated at 4.76% and 5.16%, respectively.
“In fact, this 5.16% tariff increase accounts for 92% of all BCM customers.
“Our tariff structures also allow for customers to apply to change to more affordable prepayment options and migrate to indigent scales.
“Moreover, we have dropped the electricity purchasing kilowatt charge ... This means that if you buy electricity in the metro, you now receive more electricity units than in the past.”
Ngwenya said most of the city’s non-indigent domestic customers fell within this category.
The chamber’s Lizelle Maurice confirmed the meeting, saying the business chamber had since changed its stance about the tariff hikes after it had received a proper explanation from city bosses.
Maurice said after the explanation, the chamber felt that the increases were reasonable, but she refused to comment further on the matter until a meeting with city manufacturers on Tuesday to give feedback on the meeting with Faku.
Faku said BCM’s electricity tariff hikes would be introduced over two financial years, “as the regulator and BCM believe the impact on our customers is too high for one year”.
She said the city would introduce packages to help ease the financial pressure.
Speaking about the city’s much-maligned billing system, Faku said it was being investigated.
“We are investigating the billing system and want people who will start on clean data, but we need investigations first to see what went wrong.”
Faku said the vandalism of municipal infrastructure was one of the problems that was crippling the municipality’s finances.
“We need more security ... we need centralised security, we need more cameras that can assist while we are dealing with these challenges,” she said.
“It costs us up to R140,000 per vandalised transformer and we change them every week.”
Ngwenya said: “We are engaging vigorously with the consumers, and we are going to the ward level to show the different welfare packages, rebates and incentive options that are on offer.”
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