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Impoverished Joburgers buckle under new monthly R200 prepaid meter fixed electricity surcharge

The cost of prepaid electricity is becoming a heavy burden for Johannesburg residents after the introduction of the R200 monthly fixed charge that will go towards maintaining electricity infrastructure.
Impoverished Joburgers buckle under new monthly R200 prepaid meter fixed electricity surcharge

It has been a week since the implementation of a R200 monthly fixed charge by City Power, and poorer residents are already feeling it hit their pockets. The hike and surcharge now face not only pushback, but also possible litigation.

The monthly fixed charge came into effect on 1 July, along with the 12.7% electricity hike that has left many residents in a tight financial position. Both the hike and surcharge were approved by the National Energy Regulator of South Africa (Nersa) following City Power’s application.

The fixed rate is intended to provide revenue to fund Johannesburg’s investment into new electricity infrastructure and the maintenance of existing infrastructure. Before 1 July, prepaid residential customers did not contribute to these costs, only post-paid customers.

While R200 may seem a small sum to middle- or high-income earners, for millions of Joburg’s poor and unemployed residents it means going a week without a meal.

This is the case for mother of two, Witney Phiri of Pimville, Soweto, who survives on R1,060 a month in child social grants – almost half of it goes towards buying electricity.

In an average month, Phiri spent R450 on electricity, which would give her 130 units of electricity. She got the shock of her life when she made the same purchase on 3 July, but was given only 49 units, which will last just a week and a half.

“I thought there was a mistake, when I went to inquire I was told of the hike and the R200. How could they do that when we are already struggling?”

In a week’s time, Phiri will have to make a difficult choice of either buying more electricity to keep the lights on or buying food. With R200, Phiri can purchase just the basics – 5kg maize meal, 2kg chicken portions and vegetables, which she and her children consume for a week.

Meanwhile in Eldorado Park, Renè Brown echoed similar sentiments. Like Phiri, she was neither aware of the electricity hike and the R200 surcharge nor of what it meant.

Although she had not yet purchased electricity for July, she was fearful of what was to come.

“People are really angry about being charged so much; we are already struggling to buy electricity. How are we going to survive now?”

Brown is a pensioner and is dependent on her two employed daughters, who often complain about the rising cost of electricity.

“I thought our neighbours were selfish for bypassing meters and buying ghost units, but it looks like we will all have to do it if things do not change, otherwise it will get worse from here,” Brown said.

Both Pimville and Eldorado Park townships are notorious for violent protests, including over water and electricity issues. The areas have also seen an increase in the number of bypasses to electricity meters and illegal connections.

On Friday, City Power disconnected more than 15 spaza shops in Eldorado Park that were found to have bypassed electricity meters.

Teething problems


Barely a week after the introduction of the new tariff, scores of City Power customers took to social media to express frustration over billing issues.

City Power then issued a notice to customers indicating that electricity rates for some residential customers have been charged using business tariffs instead of residential tariffs from 1 July.

“This erroneous classification may have been caused by the fact that some customers registered their accounts using business or trust names. We are also investigating our internal systems, and this has been rectified internally,” spokesperson Isaac Mangena said.

In June 2024, Daily Maverick reported that on average, indigent households use about 200kWh of electricity a month, and from 1 July, such households would face a price increase of about 60% for this very low amount of electricity. Poor households using 300kWh of electricity a month face an increase of 45%.

Read more in Daily Maverick: Joburg’s indigent households set to be hammered with electricity price rises 

The new tariff and surcharge apply to all prepaid residents except the “indigent”, which is used to classify customers earning less than R6,000 a month or who have financial challenges and are registered as such in the city’s database.

It however remains unclear how many residents are registered.

According to the equitable share grant from the National Treasury to the City of Johannesburg for free basic electricity, there are about 950,000 indigent households in the City of Johannesburg metropolitan area that should be receiving free basic electricity.

The City of Johannesburg’s data shows that about 670,000 households live below the lower-bound poverty line. However, self-reported data by the city in the annual Stats SA non-financial census of municipalities indicates that just under 30,000 indigent households are on the Indigent Register to receive free basic electricity.

This means that some 95-97% of all indigent households in the Johannesburg metropolitan municipal area are not on the city’s Indigent Register, and therefore, the residential prepaid high tariff applies, according to energy expert Chris Yelland.

How do customers pay the surcharge? 


City Power has indicated that qualifying prepaid customers will be charged using the prepayment platform. This implies that when a customer purchases electricity, the R200 will be recovered upfront before any consumption-related charges.

“However, should the customer at the beginning of the month purchase electricity for less than R400, the payment will be split between covering the fixed charge and charges for consumption of electricity to ensure that the customer gets some kWh with every purchase until the minimum purchase threshold of R400 is reached,” Mangena said.

Those who opt not to purchase electricity altogether will then accumulate a monthly bill of R200 and be required to pay for all the outstanding months, according to City Power’s utility’s general manager for pricing and tariffs, Frank Hinda.

Following the hike and subsequent R200 surcharge, the Democratic Alliance’s Joburg caucus leader Belinda Kayser-Echeozonjoku wrote to the city’s finance MMC, Dada Morero, to ask him to urgently review or do away with the electricity tariff surcharge and provide clarity on the business surcharge and how it will be used for the benefit of residents.

Ward councillors have been inundated with queries from residents to which they could not provide answers.

Kayser-Echeozonjoku said: “I am requesting that the city urgently review and possibly do away with this surcharge on top of the increase as the 12.7% already is quite a hefty increase for residents who are battling with outages, despite there being no load shedding amid a water crisis.”

‘Double charge’


Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said: “If you recall, we raised this concern on record in council and advised that this surcharge can almost be viewed as a double charge.”

Outa has contacted the city to ask whether it understood the negative consequences of the levy and asked for the costing application to Nersa.

The organisation will now assess how to challenge the decision. “We must now consider the next steps and potential remedies at our disposal to address this problem,” Duvenage said.

Leader of ActionSA’s caucus in Johannesburg, Nobuhle Mthembu, expressed unhappiness with the policy, which she said her party would endeavour to bring to an end at the next council meeting.

“ActionSA will return to the next council sitting with the sole aim of rescinding this decision and sending City Power back to the drawing board to explore other available means to collect its revenue.”

Should the party succeed in bringing the motion to debate and vote on the policy in council, it is unlikely to pass as ActionSA and the DA do not have the necessary majority.

Mthembu did not rule out the possibility of taking the legal route should the party not get its way through council processes.

“We strongly believe that while City Power must recover its revenue from defaulting residents, the same approach should be applied to certain provincial departments that have defaulted on their payments in the past, including the departments of Education, Health, Housing, Infrastructure Development and Transport,” she said.

The city’s executive mayor, Kabelo Gwamanda, said the R200 surcharge would remain in place.

“The new electricity surcharge is a necessary intervention to create fairness and equality in the city’s tariffs regime. Post-paid customers have been paying the surcharge and only prepaid customers were excluded. What the introduction of the surcharge now seeks to do is to end the unfair subsidisation of prepaid customers by post-paid customers,” Gwamanda said.

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The mayor slammed the DA for criticising what he said had been a sensitive issue.

“Any attempt to sabotage this critical intervention is an attempt to deliberately collapse the city’s infrastructure and to maintain the injustice of creating a two-tier tariff dispensation where post-paid customers pay and prepaid customers don’t. The split between post-paid and prepaid customers in the city is approximately 50:50, and as such we cannot with good conscience disadvantage one customer base in the interests of the other,” Gwamanda said.

Outa’s manager for local government, Julius Kleynhans, has since called for the scrapping of the R200 surcharge.

“Outa believes this charge will have significant financial repercussions on our communities, especially those who are most vulnerable. It must be scrapped,” Kleynhans said.

Although the fee is intended to provide revenue to fund the city’s investment in new electricity infrastructure and for the maintenance of existing infrastructure, Kleynhans said the city should implement reasonable tariffs while ensuring that it ran cost-effectively. “It cannot pass costs on to consumers due to its own inefficiencies that it consistently fails to address, such as inadequate debt collection of conventional electricity tariffs and high electricity losses.”

While residents have told Daily Maverick they were unaware of the new hikes, Gwamanda maintained that due process had been followed and the city had consulted with residents “comprehensively” through the Integrated Development Plan (IDP) consultative process in all wards before the new tariff was approved.

“Equally and as expected, there has been some opposition to the surcharge; however, as a responsible government, the city must ensure it optimally uses tariffs to maintain the system and to increase its capacity to meet the growing population and increasing economic needs of the city,” Gwamanda said.

Outa has since identified several repercussions of the service charge on poor communities:

  • Increased financial strain: many low-income families are already living hand-to-mouth. The additional R230 charge, including VAT, will force them to make tough choices between essential needs like food, healthcare and electricity. This could lead to a significant decrease in their quality of life and wellbeing;

  • Higher risk of electricity disconnections: as households struggle to afford the new charge, we can expect a rise in electricity poverty. This will leave many families without power, affecting their ability to cook, heat their homes and provide a safe environment for their children;

  • Encouraging illegal connections: the service charge might drive some residents to seek illegal electricity connections as a desperate measure to avoid the additional costs. This not only poses safety risks, but also exacerbates the problem of non-payment and revenue losses for City Power;

  • Deepening inequality: the service charge disproportionately affects the poorest members of our society, deepening the divide between wealthy and impoverished communities. This move contradicts the city’s claimed commitment to social justice and equitable development;

  • Civil unrest: the levy risks creating unrest among communities due to social pressures which can result in rioting and protest action. Businesses who sell prepaid electricity tokens risk being vandalised or confronted by consumers due to the lack of public awareness and the lack of explanation or consideration by the city regarding the service charge; and

  • Unclear tariffs: the city’s final tariff document (see here) makes it clear that the Prepaid High Usage tariff charges customers more per kilowatt hour than customers on post-paid (conventional) meters, which was presumably designed to cover the lack of a service charge. A household on the Prepaid Low Usage presumably registered indigents, although the city tariffs do not explain this. DM


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Comments

J vN Jul 8, 2024, 06:44 AM

Indigent households can receive subsidized electricity from the council. Johannesburg receives funding from Treasury for hundreds of thousands of such households, but only a very small percentage of households have registered to receive this. Why? The reason is simple. They don't pay for the power they use. Registering is pointless to somebody who doesn't buy the electricity he uses. Electricity increases don't affect them either, because they're stealing electricity. Many of these houses have satellite dishes on the roof, powered by illegal connections.

louw.nic Jul 8, 2024, 02:00 PM

To paraphrase the Rolling Stones: "You can't always get what you want... But if you vote sometime you'll find You get what you deserve...

gfkinne Jul 8, 2024, 06:48 AM

As residents of Joburg we need to take City Power to court and have them stop this sucking of citizens dry to recover their incompetence. It does not matter who you voted for it's time to unite with those who fight for the poor and rich alike.

Francois Smith Jul 8, 2024, 11:02 AM

It would have been easier for the residents of Joburg to not vote ANC. The problem is three fold - Eskom is a mess and hence power from there has become more expensive and CoJ thought if you paid 200 useless electricians a monthly salary, the infrastructure will repair itself. Thirdly, the ANC has, not only in the struggle, but also until recently told residents that electricity will be free. That is the history: How does one solve it: You start by paying your dues. The City needs to drastically clamp down on infrastructure vandalism and electricity theft - call in the army! Then people need to rise up and vote for policies that will give them work and an education that will give them the ability to work. This is a cruel quick fix by the ANC for the ANC voters.

MaverickMe Jul 8, 2024, 08:05 PM

It is not a fix.....it is financial terrorism.

z889 Jul 8, 2024, 07:32 AM

Kenya comes to mind - people are being inundated with way above inflation increases - people are getting desperate and angry and could may well cause massive protests.

Dennis Bailey Jul 8, 2024, 08:05 AM

I have always assumed that the reason I pay exorbitant unit costs in Msunduzi is because a portion of the prepaid tarif goes to meter surcharge that post paid users pay with their monthly bill. If this changes there’s not much point in prepaid except having to tolerate the inefficiencies of meter readers and dogs chewing them, which is why I went prepaid. There’s a bigger story here about social implications and fairness of surcharges.

Frans Flippo Jul 8, 2024, 10:09 PM

Exactly! Prepaid electricity is already more expensive per kWh than postpaid! Prepaid users are effectively already paying for the infrastructure through the higher per-kWh rate! The extra fixed surcharge means that prepaid customers are now paying double. Of course the puppet mayor and the ANC crooks keeping him in power don’t understand this since basic maths is above their IQ.

elvissmith820 Jul 8, 2024, 08:15 AM

The Mayor of Johannesburg is not defending Joburg residents his destroying residents by over charging and the more they increase electricity is the more electricity will get stolen because it's unaffordable And as it for Nersa they're not protecting consumers every company that applies for price increase on electricity they agree? What is Nersa's work? Because they are failing in all aspects to regulate prices increases? They agree with everything that makes it difficult for consumers to buy electricity at reasonable prices I don't blame people who are stealing electricity it's unaffordable And South Africans are keeping quiet about it but they strike for other things for instance Kenyan people they don't take nonsense from their government if it increases electricity of fuel Kenyan people become vocal they fight for what is right until the government listens to their grievances South African people need to wake up and fight for what is right and stop this thing of agreeing with everything our government says I don't mean we must burn things to be heard but we must be vocal we vote for parties to help us not to ripped off by people who wants to make names for themselves at the expenses of residents residents.

Con Tester Jul 8, 2024, 10:44 AM

NERSA is just another useless government department that was established for the purpose of spending taxpayer money on cadres whose main function is to pretend reviewing and regulating various aspects of electricity supply, including the allowable tariffs, but who in reality merely rubberstamp what the bigwigs at Ekskrom and the relevant ministers decide. It is a grievous mistake to think that NERSA is in any way an independent entity.

megapode Jul 8, 2024, 08:30 AM

Middle class pre-paid user like me should remember the old law of the Transvaal, and do a quick bit of arithmetic which will show that you are still saving compared to your neighbours on the default tariff. But the poor... There are special tariffs available for the indigent, but the usual problem with the City is communication. They need to get this message out of there. Every resident should know what rebates are available to them and how to apply. And then the second half of the conumdrum, is that the City needs to process these applications speedily. It's the same old trap. I'm not wealthy but well off, I have a smart phone and access to social media (where the City tends to broadcast information), I can go to City Power offices and speak to people. But for a poor person this is a big mission. Some are illiterate, the taxi fare is significant to them, they need to find somebody to care for young children, they don't have proper property deeds. The well off who don't need these rebates know all about them, the poor for who they would make a substantial difference (surely the intent) don't know, and if they do know there are rebates then they don't know where to start and have difficult accessing information and facilities.

Miss Jellybean Jul 8, 2024, 09:16 AM

Hate to break it to you but go to City Power website for tariffs & you will find prepaid rates per kW are more than post paid

megapode Jul 8, 2024, 12:15 PM

I'm a pre-paid user and I'm quite aware of the tariffs. However, a look at the tariff tables and some simple calculations shows that most households will still save money on pre-paid.

aylanadine Jul 8, 2024, 08:33 AM

R200? that is nothing compared to the fixed charge East London residents are being forced to pay of R750.

megapode Jul 8, 2024, 09:12 AM

It's nothing compared to what users in Johannesburg on the default pay - approaching a grand once VAT is added. However, that R200 is a big deal for people like the one mentioned here who are trying to get through the month on a couple of hundred units.

megapode Jul 8, 2024, 09:19 AM

The fixed charges vary a lot. There used to be no fixed charge on pre-paid connections in Johannesburg - but those users paid more per kWh. The default residential tariff has about R800 (excl) in fixed charges. COCT the fixed charges are lower but the per kWh price is significantly higher. Johannesburg, despite the fixed charges, has some of the cheapest electricity in the country. Indigent users such Witney Phiri are supposed to get relief on municipal tariffs. But they have to apply for these concessions, which involves a means test. I would bet that she has no idea that those concessions are available, even less how to apply for them. And when she does apply the City will drag it's heels processing her application. As a start we need the City, elected representatives (who all say they care for the residents), ward committees, residents associations to start spreading the message and providing assistance for people who qualify for and genuinely need these concessions.

Kel Varnsen Jul 8, 2024, 08:52 AM

I pay a prepaid surcharge of R219.21 + VAT in Cape Town.

johnbpatson Jul 8, 2024, 09:00 AM

And how long before "maintaining electricity infrastructure" starts? That is the problem, if people quickly see workers up poles and in their houses making sure electricity is safe and switched on then they might, just, accept the price. If they are left with continuing power cuts and rude crews of men ripping out "illegal connections" and swaggering about like thugs, expect trouble.

Middle aged Mike Jul 8, 2024, 10:22 AM

"Maintaining" isn't a deployed cadre thing and that isn't about to change any time soon. The substations and overhead power lines in my area haven't been maintained in at least 5 years and look as though they are returning to nature. You only ever see teams out responding to outages. JHB is going down the bog fast and I'm really not enjoying the ride.

johnbpatson Jul 8, 2024, 09:00 AM

And how long before "maintaining electricity infrastructure" starts? That is the problem, if people quickly see workers up poles and in their houses making sure electricity is safe and switched on then they might, just, accept the price. If they are left with continuing power cuts and rude crews of men ripping out "illegal connections" and swaggering about like thugs, expect trouble.

Miss Jellybean Jul 8, 2024, 09:08 AM

When City Power refused to repair my meter & forced me to get a prepaid meter I noticed the rate per kW was more & was told but you don't pay the fixed DSM, Service & Network fees thats why. Now they are charging this fee every month but haven't reduced the kW pricing. My suggestion is every single pensioner now takes advantage of the rates rebate to recover this R200.00 and more. Hit them where it hurts.

megapode Jul 8, 2024, 09:58 AM

This surcharge has been coming for years. It was first included in the budget, and passed, in 2019. So it's amusing to see the DA and ActionSA getting on their high horse about this charge. That year it was canned after a huge public outcry, and the explanation was that it had been added to the budget after sign off (yeah right). The surcharge was budgeted and passed again during the lockdown, but then immediately repealed as part of the City's social relief grant. Now it's back and it seems this mayor is thicker skinned and it's staying this time. You are still saving compared to folks on the default tariff that you used to be on. The rates rebate is means tested if you are under 70. There's also a lower electricity tariff available, but again this is means tested - and rightly so. If you've over 70 then rates relief is available on your first property and if you are the account holder.

Fanie Rajesh Ngabiso Jul 8, 2024, 09:17 AM

Corruption and cadre deployment causes our people suffering and death. Stop it now.

Kel Varnsen Jul 8, 2024, 09:46 AM

You may not be wrong, but your comment doesn't relate to the article.

Con Tester Jul 8, 2024, 10:20 AM

Never forget that Kabelo Gwamanda is little more than the ANC's and EFF's marionette, and that they need to keep the trough loaded by any means at their disposal, including squeezing the poor—who will continue to vote for them.

Neil Parker Jul 8, 2024, 07:31 PM

That's interesting because if so I would say this surcharge is extremely reminiscent of the EFF's complete and shameless disregard for the poor and disadvantaged as already evidenced by the VBS looting. I always understood that the absence of fixed charges in prepaid charges was made up by the higher cost per kilowatt hour. Can Mr Gwamanda explain to us exactly how this supposed disparity between pre-paid and post-paid charges arose in the first place? Consumers did not decide on the tariff structure(s). City Power did so they cannot now point fingers at prepaid customers telling them how "unfair" it is to post-paid. If they made a mistake in their calculations of prepaid tariffs, it's not the fault of prepaid customers. In short Mr Gwamanda - don't make your problem our problem! We are not "saboteurs" for protesting - you and City Power are because you are totally and utterly inept.

cberrington Jul 8, 2024, 10:22 AM

The unrelenting looting of government funds necessitates these new surcharges , and like the sewage connection fee ( over R650 monthly for my townhouse ) little or none of the income will be used to maintain said infrastructure . At R650 and more for every toilet in rated properties there should be money enough to ensure that sewage leaks are exceptional and all sewage plants should be fully functional ( the state of our polluted water ways says this is not happening while sewage leaks in Windsor and surrounding areas confirm the disgracefully poor state of maintenance) . There is no doubt that the same process will magically ensure that the new funds for maintaining electricity will be used elsewhere, new cars or , even better , “ performance bonuses “ for the mayor and The Cadres who support him . Shame on you Mr. Mayor!

Nkunku S Jul 8, 2024, 10:27 AM

Normal business practice would allow some preferential tariff for prepaid users, given that they pay up front for the services, there are no bad debts and no collection fees. To add a premium is completely counterintuitive. This is simply a case of adding additional charges because they can. Finally, has this additional charge been approved by NERSA, given that it is effectively a price increase?

Middle aged Mike Jul 8, 2024, 10:47 AM

100% agree. I can't think of a product or service I buy on a recurring basis from an entity other than the city where I don't get a discount for paying up front. It should be obvious that a great deal of the city's budget for maintenance goes astray and you can bet the farm that the proceeds of this little heist will be no different. Sadly we seem doomed to follow the majority of voters straight down the loo.

megapode Jul 8, 2024, 12:18 PM

The current tariff is preferential. The tariff tables are in the public domain, so it's easy enough to calculate what you would pay on the default and pre-paid tariffs. And for most domestic users, pre-paid will deliver a saving.

David Harley Jul 8, 2024, 01:48 PM

This could so easily be fixed by incorporating into a sliding tariff. Charge zero for first 100, 50% for next 100, 100% for next, 125% for next and so on. Low usage is subsidized by high usage and those who can afford it, and you incentivize people to go legit rather than the reverse. Does anyone at City Power actually know how to model budgets?

Con Tester Jul 8, 2024, 02:20 PM

Or, better yet, eliminate the inefficiency, staff bloat, apathy, self-importance, corruption, theft, incompetence, and malfeasance from Joburg’s administration, and they wouldn’t need to introduce a surcharge at all, for any users.

Middle aged Mike Jul 8, 2024, 03:54 PM

Easy tiger, if you take all that out there will be precious little left.

Con Tester Jul 8, 2024, 04:53 PM

Quite so. ???

Middle aged Mike Jul 8, 2024, 03:54 PM

Easy tiger, if you take all that out there will be precious little left.

Johan Buys Jul 8, 2024, 07:10 PM

Something is wrong in the reporting of this or in the facts presented. Councils receive an operating income grant from central tax revenue for indigent water and electricity. No council can both receive that grant and charge poor households. It would be fraud/illegal.

once.off.address Jul 8, 2024, 10:35 PM

I wonder who they voted for... just saying.