BCM has itself to blame for electricity tariff troubles

Buffalo City Metro’s announcement that qualifying senior citizens will be exempt from its controversial monthly basic electricity charge will bring relief to thousands of battling pensioners. But, as usual, with BCM there is a caveat. The relief for pensioners has to be seen against the background of a municipality that charges more for electricity than any other metro in the country.

As of July 1, the metro saw fit to burden its residents with a 14% increase, the steepest by far and 5% more than the rate suggested by the national regulator. Compare that to the City of Cape Town where electricity was increased by just 7.5%. In other words, the residents in a city in one of the poorest regions with the highest unemployment rates effectively suffered double the pain of those in the city in a wealthier region that has the lowest unemployment.

Energy education and solar platform Energybee explains that municipalities apply to Nersa for tariff hikes based on their finances, how much debt they carry, how high their distribution losses are, and how much they leans on electricity sales to subsidise the rest of their budgets. It is BCM’s biggest revenue line and, as Energybee explains it, the 14% hike “is not really about the cost of power — it is about the health of the municipality selling it to you. You are, in effect, paying a surcharge for where you happen to live”.

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And, if you want to compare the increases in rands and cents: This is what Energybee tells us. People in Cape Town will pay R188 per month more for electricity from July 1. People in Buffalo City Metro pay R350 a month more.

Essentially, the energy experts suggest that the better run cities rely less on electricity as a revenue stream and are able to benefit their residents accordingly – in all sorts of ways. And so, while cutting senior citizens at least some slack, BCM should consider all the other options presented to it. It can help limit its own electricity losses that happen through illegal connections and theft of infrastructure. It should also improve its revenue collection in other areas to reduce its reliance on electricity as an income stream.

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