Cape Town’s latest round of electricity price hikes will hit consumers hard, the Cape Town Regional Chamber of Commerce and Industry has warned.
From tomorrow, the city’s electricity tariffs will increase by around 19.94 percent, as Eskom has increased its bulk selling price to the city by 26.7 percent.
The chamber has described the increases as a big blow for local businesses, which will be forced to pass on costs to their customers.
Consumer groups say the increase – officially tabled in the city’s budget earlier this month – should come as no surprise, but warned that households would be compelled to cut down on the most basic purchases.
Residents living in parts of Table View, Durbanville and Khayelitsha will not be affected by the hikes because their power is supplied by Eskom and not bought from the city. Electricity tariffs for Eskom distribution areas went up by 25 percent in April.
According to Cape Town lighting firm Eagle Lighting, scores of big businesses were forking out about R3 million to fit their buildings with energysaving devices, including lights in parking garages that light up only when cars approach.
The company said while it was expensive installing energy-saving equipment, this would translate into savings in the long term.
It is estimated that the average household, with two adults and two children, consumes around 800 units a month.
Currently, 750 units cost R797 a month. This will jump to R936.
One thousand units cost R1 063 at present. From tomorrow, that same number of units will cost R1 273.
The Cape Town Chamber said the hikes would “hurt” local businesses.
Executive director Viola Manuel said the hike was coming on a high base, with more increases on the cards.
“Most of the annual increases have been in the region of 25 percent, while the inflation rate has been below six percent. This has put businesses under severe pressure. The savings that could be made have, in most cases, been made. They now have no option but to pass the price increases on to consumers.”
Manuel said it would also be more difficult for businesses to compete with imported products, while South African exporters were “losing their competitive edge”.
“The increases are also hurting domestic consumers, and bigger chunks of the household budget are being spent on electricity. This means there is less money to buy food and other items, so there is less business for shops and other service providers.”
The National Consumer Forum said households were spending large amounts of their income on debt.
Chairman Thami Bolani said households had been struggling with increasing electricity costs for more than four years.
“A lot of people are barely earning a living wage and the problem of indebtedness is only getting worse.”
Bolani said families would have to tighten their belts to survive the increases.
“They will have to cut some purchases out, even food and basic services. This impacts negatively on quality of life.”
The city said the average increases would be less than 19.94 percent, but that users consuming more than 1 000 kilowatt hours a month would be hardest hit.
Property rates will jump by 5.9 percent, while water and sanitation tariffs will increase by 8.23 percent.
The National Energy Regulator of South Africa granted Eskom a tariff hike of 24.8 percent last year, and a similar increase of around 25 percent is planned for next year.
Earlier this month Nersa head Thembani Bukula told MPs the parastatal would have been bankrupt in four years if it had not been granted the hikes. This week Eskom reported a 28 percent growth in revenue in the past financial year, driven by the increased tariffs.
Source: The Argus
