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South Africa: Jo'burg's New Tariff Proposals Target Wastage
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Business Day (Johannesburg)
27 March 2008
Posted to the web 27 March 2008
Sibongakonke Shoba
Johannesburg
THE City of Johannesburg has proposed a new tariff structure for essential services that would hit high consumers of water and electricity hard.
The measures are an attempt to promote conservation of scarce resources and curb wastage.
Yesterday the city invited residents to comment on a new system of tariffs for essential services, such as water, electricity and refuse removal, in a public participation process.
Parks Tau, a member of the Johannesburg mayoral committee for finance and economic development, said a new system to determine tariffs was essential to take into account recent trends and international best practice.
"As a city we have to set realistic tariffs for these services against the backdrop of increased demand on limited and fast depleting resources," said Tau.
He said key factors to be taken into account when tariffs were determined included national electricity supply constraints, a projected shortage of water resources by 2025, and rapidly depleting landfill space for waste .
"The city believes users of services must pay for their consumption. High consumers must pay higher tariffs than low consumption users," he said.
"This approach will encourage both residential and commercial consumers to reassess consumption patterns, introduce conservation measures and cut down on wastage of scarce resources."
Although the city plans to go deep into the pockets of high consumers, it would increase the free basic water and electricity it provides to the poor.
Tau said the municipality planned to lift free basic water quotas for registered indigents from 6000l to 10000l a month and to double free basic electricity, from 50kWh to 100kWh.
Household consumers using less than 15000l would not see an increase on their bills for the next financial year. Water tariffs for households consuming more than 15000l would increase by the consumer price index excluding mortgage bonds (CPIX). Tariffs for those consuming more than 20000l would climb by CPIX plus 1%, more than 30000l by CPIX plus 2%, and more than 40000l by CPIX plus 3%. Water tariffs for commercial and industrial users would increase by CPIX plus 2%. The municipality proposed that residents able to pay should no longer be allocated free basic water.
Tau said recent hefty increases in bulk purchase costs from Eskom and Kelvin power station had resulted in an overall 22,12% increase in input costs.
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He said principles that should serve as guidelines when implementing the tariffs were: decreasing the electricity consumption threshold for households not on the indigent register from 1500kWh a month to 500kWh; increasing tariffs in line with consumption for both domestic and large power users; a CPIX increase on consumption in excess of 100kWh but less than 300kWh; a CPIX-plus-1% increase on consumption in excess of 300kWh but not exceeding 500kWh; an increase of between 19% and 23% for large power users; an overall 19% increase on present tariffs; and a demand-side management tariff increase of 23%, which would be effected on winter tariffs.
Tau said the city also proposed that the refuse collection tariffs structure be based on property values.
Residents can comment on the proposals from Friday.
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