Council power hikes 'illegal'

Pretoria - Forty-nine municipalities distributing electricity failed to apply to the National Energy Regulator (Nersa) for tariff increases this year.

If these municipalities have pushed up their tariffs to compensate for the 31.3% rise in Eskom's bulk tariffs, these increases are illegal.

Another 11 municipalities submitted their applications after the July 1 deadline and will only in November hear whether their new tariffs have been approved.

From enquiries to Nersa it appeared that municipalities may not apply new tariffs before these are approved by Nersa.

Lucas Opperman, an authority on the Municipal Finance Management Act, gave Sake24 confirmation that municipalities are permitted to alter their tariffs once a year only - on July 1.

The exception is if Finance Minister Pravin Gordhan condones this.

Last year this was done to enable municipalities to recover from consumers the previous 27% Eskom increase.

This year National Treasury announced in good time that permission would not be given again, and recommended that municipalities make provision for a 34% Eskom increase.

Eskom's eventual increase of 31.4% was announced just a few days before the start of the new municipal financial year, and Treasury gave municipalities the choice of quickly adjusting their budgets or keeping to their calculations based on a 34% increase.

Budget deficits

The result is that 60 municipalities are now probably charging illegal electricity tariffs and will not be able to legitimise them before July 1 next year.

If these municipalities are forced to apply the previously approved but much lower tariffs, massive deficits in their budgets would result.

Jaap Kelder, spokesperson for the National Ratepayers' Union, encourages taxpayers to check whether the electricity tariffs that their municipalities are charging have been approved by Nersa.

One such enquiry by residents in the Kannaland municipality in the Western Cape has revealed, for example, that Nersa had approved 25% for domestic consumers.

But, according to Hennie Smit, secretary of the Kannaland Taxpayers' Union, electricity accounts for residents of Kannaland - which includes Ladismith, Vanwyksdorp and Calitzdorp - doubled.

Nersa informed Sake24 that it had received a formal complaint in this regard and had taken the municipality to task.

Kelder said preliminary enquiries from taxpayers in various municipalities indicate that this practice is more widespread.

- Sake24.com

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