Major tariff structure reforms, proposed by the City of Cape Town in its draft budget last week, will bring about much-needed relief for lower-income households.
However, it seems at this stage that middle-income households could – on calculation of the staggered tariff scale – see a higher than expected increase in their monthly municipal account, to fund the R84,1 billion budget for 2025-’26.
Along with the draft budget, new fixed charges and a tariff change was proposed by Cape Town Mayor Geordin Hill-Lewis on Thursday to come into effect on 1 July.
Fixed water charges will now be determined by property value rather than the connection size of the pipe, as was used when this water-pipe levy was first introduced during the drought back in 2018 to help cover the costs of the crisis. This is likely to result in a increase for the fixed charge on water consumption for properties valued at more than R1,5 million when examining the scale.
The electricity Home User fixed charge will increase from R245,03 to R339,89, a 38,7% increase, while the Domestic User category which covers properties between R500 000 and R1 million is also now to pay a fixed charge of R59,90, making the 2% tariff increase for 2025-’26 on the consumption portion of the electricity tariff not so generous for some.
In addition, the City is introducing what they call a City-wide cleansing levy that according to the City will change the method how customers will continue the funding of cleansing services. This charge is also based on property values ranging from R93 to R12 012,91, while the overall refuse tariff will decrease by 7,36%.
In addition, a new sanitation fixed charge is also being introduced based on property values starting at R700 000, which the City claims will be offset by a reduction in the charges for sanitation volumes. Property rates itself will increase by 7,96%.
A surprise for ratepayers
Sandra Dickson, founder of civic action group Stop COCT, says this budget that increased by nearly R8 billion rand from last year’s R76,6 billion, holds many surprises for ratepayers.
“After years of criticism about the electricity department ‘subsidising’ the rates department by 10%, this is now done away with, leaving the electricity department to retain 10% of its revenue while the rates department is left with a hefty shortfall.
“The retention of 10% of the electricity department’s revenue allowed the City to increase the electricity tariff by 2%. It also reduced the ‘unregulated’ portion of the tariff substantially,” she argues.
“The City claims that the reduction in the sewerage tariff will balance out the effect of the fixed charge, but this is simply not true for the higher valued properties.
“For a property valued at around R2,8 million with a water consumption of 9Kl per month, sewerage is now 34,8% more expensive after the fixed sewerage charge was added for a household consuming 9Kl of water per month.”
City of hope
In illustration, this same property was used to calculate the total municipal bill on the City’s online calculator coming to R500 more, from R3 449 to R4 068, an increase of about 16% as apposed to this rate payer’s tariff increase of 9% in the previous year.
Sticking to his “City of Hope” narrative Hill-Lewis said “every budget is a balancing act, and for us this is between our bold plans to build the Cape Town of the future and the need to shield our most vulnerable residents from the enormous financial pressures that make their daily lives very hard. We have called this the ‘Invested in Hope” budget.”
• To comment on the budget before 2 May, or to view the City’s household bill calculator, visit www.capetown.gov.za
