Nersa has approved a 12.74% electricity tariff increase for Nelson Mandela Bay for the 2025/2026 financial year. The municipalit had applied for a 12.8% increase. (Photo: factor.am / Wikipedia) 
The Nelson Mandela Bay metro said on Friday that it was taking a second look at its plans and budgets after the National Energy Regulator of South Africa (Nersa) granted the metro a smaller-than-requested increase for the next financial year.
The metro requested a 12.8% increase but was granted only a 12.74% hike for electricity prices.
The application for the increase was already controversial. It was also done in the absence of a cost-of-supply study, which will only be undertaken in the coming year.
Municipality to revise plans
Metro spokesperson Sithembiso Soyaya said the municipality noted and welcomed Nersa’s approval of the electricity tariff for the 2025/2026 financial year.
“While the approved tariff of 12.74% is marginally lower than the 12.80% increase the municipality initially applied for, we fully respect Nersa’s regulatory mandate and the importance of striking a balance between municipal sustainability and consumer affordability.
“The municipality is mindful that even a 0.06% difference can impact projected revenues, particularly when scaled across our electricity user base. To address this shortfall, we shall be implementing a combination of efficiency measures and financial controls. These include improving internal operational efficiencies, reducing electricity losses and illegal connections, enhancing billing accuracy and strengthening revenue collection,” he said.
“We are going to reprioritise our budgets to ensure that essential electricity infrastructure maintenance and upgrades continue without compromise, while trimming or deferring non-critical expenditures.”
Soyaya said the municipality would also intensify efforts to improve the collection of outstanding payments from all user categories, expanding the prepaid electricity footprint and fast-tracking components of the broader Energy Resilience Plan.
“This includes working with partners and exploring embedded generation and cost-efficient energy alternatives to reduce long-term dependency on bulk electricity purchases.
“We shall be taking proactive steps to manage the gap responsibly, and we will continue working with Nersa and our stakeholders to ensure uninterrupted, quality service to the residents of Nelson Mandela Bay,” Soyaya said.
Business Chamber ‘concerned’
The CEO of the Nelson Mandela Bay Business Chamber, Denise van Huyssteen, said the chamber remained deeply concerned about the sustainability of the municipality’s electricity department.
“We note that Nersa has granted approval for the Nelson Mandela Bay Municipality’s electricity tariffs to increase by an average of 12.8%, effective from 1 July.
“Input costs, such as rising electricity tariffs, have a direct impact on the viability of the operations of businesses. For a number of years we have been deeply concerned about the unsustainability of electricity distribution in the metro, which in the current financial year lost R1.5-billion and is projected to lose R1.8-billion in the next financial year. Key drivers of these losses include electricity theft, illegal connections, meter tampering and the vandalism of infrastructure.
“Solutions which need to urgently be put in place include the reinstatement of the geyser control system, which has the potential to save the municipality up to R200-million a year,as well as deploying effective safety and security measures to prevent vandalism of sub-stations and other vital electricity infrastructure.
“The other issue of high concern is the lack of investment and maintenance in the electricity infrastructure, which is vital to ensure the continuity and reliability of electricity supply. An urgent and vital step, in addressing the infrastructure issues, is securing the technical support of Eskom through their active partnering initiative,” she said.
Deal with meter tampering
The Democratic Alliance’s (DA) mayoral candidate for next year’s local government elections, Retief Odendaal, urged the municipality to speed up the roll-out of electricity meters to deal with households that applied for amnesty under a programme that was offered in 2022.
He said that after three years, 90% of the about 18,000 households or businesses that applied for amnesty have not received new meters, meaning the municipality is losing a conservative R18-million a month in fees.
Ratepayers footing the bill
The African Christian Democratic Party’s Lance Grootboom said Nersa’s tariff increase was four times the inflation rate.
“It is way out of line,” he said.
Grootboom said that it is even more disconcerting that the metro’s electricity department buys bulk electricity from Eskom for R6.8-billion but, because of meter tampering and illegal connections, makes only R5.4-billion, leaving it with a large deficit.
He said ratepayers are paying twice for electricity, as their rates also increased by 5%, to subsidise, among other things, the electricity department’s large deficit.
Tough choice
Speaking in Johannesburg two weeks ago, the national Minister of Electricity, Kgosientsho Ramokgopa, said the rapidly rising cost of electricity is forcing households to choose between food and energy.
Read more: Electricity tariffs force a choice between food or power, says Electricity Minister Ramokgopa
This came after Johannesburg residents made representations last year to be excluded from an electricity surcharge to bolster the City of Johannesburg’s efforts to afford its electricity bill.
Read more: Food or electricity — power tax forces a cruel choice on Joburg’s poorest people
In November last year while testifying at Nersa’s hearing into Eskom’s application for a massive tariff increase, Melikhaya Blani from the Eastern Cape Combined Environmental Forum described how many households were already struggling to afford electricity and had to cook on wood.
Electricity surcharge
Last year the Buffalo City metro, which had similar concerns over the funding of its electricity budget, introduced a service charge to all electricity users.
In a response to a question asked by Leander Kruger, the DA’s constituency leader for Buffalo City, the MEC for Cooperative Governance in the Eastern Cape legislature confirmed that the service charges range from R376 to R51,484.09 depending on the type of electricity user.
The introduction of service charges sparked several protests and legal action against the municipality. DM