Punished for saving

Jasmine Uys, Athlone

First they asked us to save electricity, which we did, then they asked us to save water, which we also did, now the City is punishing us for doing what they asked us to do.

So, what’s the point? You cannot win. I also don’t see what the value of your property has to do with the amount of water or electricity that you use? Many people worked hard through the years to be where they are today, now the City wants to punish them for it.

Just because their house is worth a million or more, doesn’t mean to say they earn a million. Many pensioners stay in big houses, not because they’re rich, but because they worked hard through the years for their homes, and their whole lives they knew no other home. Maybe the City wants them to leave their homes and go squat rather, at least then they will get everything for free.

Many pensioners are already struggling to survive on the little they have, how on earth will they be able to survive the massive rates, water and electricity hikes? This City definitely doesn’t work for you, one of the reasons me, my family and friends are rather going to vote ACDP next year, that is, if we are going to vote.

The City of Cape Town’s mayoral committee member for finance, Johan van der Merwe responds:

The impact of the current water crisis is clearly evident in this year’s tabled (draft) budget for the 2018/19 financial year. There is a need to increase our water and sanitation tariffs substantially to enable us to continue supplying water and providing sanitation services.

The City has already reprioritised some
R2.6 billion of its existing budget and the tabled budget includes strict budget cuts and curtailments in an effort to help the City to pay for the effects of the worst drought in recorded history.

We need to emphasise that, in terms of the municipal budget, we make no profit from water and sanitation services. The service must be self-funded which means that all revenue is applied to covering operational expenditure.

It is also important to understand that the fixed costs to supply water remain the same irrespective of how much or how little water has been used. While our daily demand has decreased by around 40% in the past year, operational costs have not decreased.

To be resilient to future droughts, our tariff structure requires greater income certainty and better diversification which is not based on whether more or less water is being used.

We are therefore proposing fixed delivery charges for water.

A fixed charge for a consumptive service is not uncommon, especially where low consumption is evident such as in response to drought. The municipality of eThekwini, for instance, introduced a fixed charge in response to drought. Furthermore, for the city to have a resilient, water-secure future, we need to invest in other water sources such as groundwater abstraction and water re-use so that we do not rely as much on rainfall alone. It is important to note that we’d like to move to a lower restriction level and thus a lower corresponding tariff as soon as we can.

This is entirely dependent on adequate winter rainfall which would prompt the national Department of Water and Sanitation to lower restrictions.

Greater income certainty is also required in the electricity tariff structure. Approximately 30% of revenue received from electricity is directed towards repairs and maintenance of the City’s electricity grid, among others. The fixed costs associated with providing electricity to residents remain the same irrespective of how much electricity is used. Currently, a fixed cost is not in place. Thus, as part of revising our tariff structures, the City is proposing a change to electricity tariffs which will affect all households valued at R1 million and over. The change is aimed at ensuring that residents who own properties valued above R1 million contribute equitably to the fixed costs associated with electricity supply.

Under the current tariff formula, those who buy less than 600 units a month are being subsidised by those who buy more. As fixed costs bear no relation to consumption on the property, the City believes it is reasonable and appropriate that those living in properties valued at over R1 million should contribute equitably towards these costs.

The model where fixed charges applies, whether for water or electricity, has been implemented in other parts of the country, for example, for water in Durban as a result of their severe drought, as well as Stellenbosch and Drankenstein municipalities; and for electricity by Eskom, City Power and the City of Mangaung.

Pensioners should please take note that the City has a special tariff available for residents who are considered indigent called the Lifeline tariff. Pensioners can also access this tariff if they qualify for a pensioner’s rebate, i.e. if their household income is less than R15 000/month, provided they have a prepaid meter installed and use less than 350 units/month on average.

Pensioners with a household income of more than
R15 000/month are not considered vulnerable, and will therefore be placed on the Home User or Domestic Tariff depending on the meter type and value of the property.