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Eskom has been granted permission by NERSA to increase its electricity tariffs by 18.65% but that does not mean that municipalities now have the right to inflict a similar increase on consumers.
Why? Well there are two elements built into the retail price of electricity. One is the actual price your municipality pays Eskom for each kilowatt hour of electricity and the other element is the local distribution system which consists of the wires and the transformers in the municipal grid as well as maintenance costs and administration.
So the wholesale price of electricity will go up by 18.65% but local distribution costs will not. In fact, local cost increases are quite different and should rise only by, roughly, the inflation rate and that is well below 18.65%.
If we assume that half of your monthly payment goes to Eskom and the other half to the municipality an increase approaching 12% may be justified.
Unfortunately many municipalities have in the past simply increased their prices by the full Eskom increase, said they regretted that they had to do it and settled back with big fat cat smiles on their municipal faces.
So what are the facts? Well, the local costs of distributing electricity should actually going down! Municipalities no longer send out teams of meter readers, turn the readings into accounts to be printed, placed in envelopes and posted to consumers followed by banking the cheques, accepting cash payments, writing receipts, chasing up the late payers and dealing with bad debt.
Instead we buy our electricity, cash in advance, from the local supermarket and the money flows straight into the municipal coffers.
Where accounts are necessary they are sent out by e-mail and the consumers print them out at their own cost on their own printers for their files and pay by EFT. The saving in costs alone should be enormous and municipal administrations should be getting smaller and they should cost us less.
Now that you have the full picture you will be in a position to resist any municipal bid to match the Eskom tariff increase.