Joburg power mark-up 117% - report

Johannessburg - Johannesburg's City Power had a mark-up of 117% on electricity it obtained from Eskom and resold, according to Business report on Wednesday.

The National Energy Regulator of SA (Nersa) heard on Tuesday that this was much higher than other cities in the country and a threat to the manufacturing industry.

A director at Scaw Metals, Markus Hannemann, warned that if the City of Johannesburg's electricity tariffs continued to increase at current rates, its factory in Johannesburg would close.

Hannemann said the factory employed 1 100 people and provided steel wire ropes throughout the world, largely to the mining industry.

The latest proposed tariff increases by City Power would add R9.2m to Scaw Metals' annual electricity bill.

He said that only R4.3m of the R9.2m increase was required to cover Eskom's tariff rise and City Power was making an additional almost R5m from it.

He spoke at a Nersa public hearing on an application by City Power to increase its municipal electricity tariff by 27.7%, which is above the Nersa guideline increase of 20.38%.

Hannemann said the 117% mark-up on electricity appeared to be the highest in the country. The neighbouring municipality of Ekurhuleni had a margin of 56% and Durban a mark-up of 35%.

A manager at Scaw Metals, Damon Symondson, appealed to Nersa to consider enforcing a 0% increase for City Power over the next three years to bring its industrial tariffs more in line with tariffs in other municipalities.

Acting managing director of City Power, Sicelo Xulu, cautioned against making tariff comparisons, but later admitted that no comparative studies of fees in other municipalities had been done.