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Many Cape Town prepaid customers will be charged domestic tariffs

Cape Town is the second largest city in South Africa and is the capital of the Western Cape Province.

Some prepaid electricity customers in Cape Town may be in for nasty surprise come October 2016, as the city adjusts its qualifying criteria for their subsidised Lifeline Tariffs. The new, more stringent rules add a maximum municipal property value to the mix that will see many households currently on Lifeline rates migrated to the more expensive Domestic Tariff.

Currently, those with credit meters billed on a monthly basis don’t have the option of applying for Lifeline rates at all, but new and prospective prepaid customers whose municipal property values don’t exceed R300,000 and who use 450kWh or less each month (based on a 12-month average) can qualify for significant savings on their electricity costs.

Game change for prepaid

The rules for existing prepaid electricity customers, however, are a little different depending on when they had their meter installed – this is where October’s policy changes come into play.

“In the past, all you needed to qualify for subsidised electricity rates was a prepaid meter and an average power usage of less than 450kWh per month,” said Bill Rawson, chairman of the Rawson Property Group. “What that meant was that even very wealthy people living in beautiful and expensive homes could take advantage of the subsidies by simply using minimal amounts of electricity. To prevent this, the maximum municipal property value of R300,000 was added to the qualification criteria for the Lifeline tariff, but it wasn’t retroactively applied to existing prepaid customers.”

Because of this, many customers who have been on Lifeline Tariffs for several years would not be eligible for those subsidies if they reapplied today due to the value of their properties. The City of Cape Town’s tariff migration scheduled for October 2016 will begin to move these customers on to the Domestic Rate. This will allow the city, according to its media release on 15 April 2016, to reduce the average tariff increase in 2016/17 for all Cape Town’s electricity consumers to 6.62% as opposed to 8.26%.

To ease customers into the tariff migration process, only those with properties valued at more than R1m will be migrated from their current Lifeline Tariff to the ordinary domestic rate, however. Exemptions will also be made for those who qualify for pensioner or disabled rebates, and registered indigents as per the Credit Control and Debt Collection Policy.

“For most homeowners who can afford to pay the rates and taxes on a home valued at more than R1m, the additional cost of the ordinary Domestic Tariff should hopefully be negligible in the grand scheme of things,” said Rawson. “It’s definitely preferable to a more dramatic overall electricity price increase, which raises the cost of living across the board thanks to the effect it has on general inflation and the local economy.”

Cape Town’s tariff migration proposal forms part of the 2016/17 draft budget, and can be viewed at any sub-council office or city library, or online at www.capetown.gov.za. Final council approval was scheduled for the end of May 2016.

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