While OVAC was still attempting to meet with the Overstrand Municipality regarding its electricity tariff restructuring, Council proceeded to approve a slightly modified version of the draft despite several important questions remaining unresolved. Although written comments had been invited, OVAC’s requests for direct engagement on key aspects of the proposed tariff structure were not accommodated.
What should residents know?
Despite repeated objections, households will now face higher fixed electricity charges than ever before, regardless of whether any electricity is used in a given month.
These fixed charges vary depending on whether a household has a 30A, 40A, or 60A connection, with increases of approximately 3%, 10%, and up to 16% respectively. These categories were introduced two years ago as part of the municipality’s tariff restructuring. OVAC maintains that the public participation process was inadequate and has questioned whether the categories are genuinely cost-reflective, arguing that the municipality has not demonstrated a clear and transparent relationship between the fixed charges and the actual cost of supply.
We can confirm that the originally proposed 65% increase in the capacity charge was reduced to 20% following significant public objection.
Other than that, the rate per unit of electricity will increase by 8.5%.
OVAC does not support the move toward higher fixed charges, which it argues function in practice as an additional municipal levy. Instead, OVAC advocates for the removal of fixed charges from municipal billing altogether, and for a greater reliance on usage-based tariffs (for example c/kWh for electricity and c/kL for water).
While the municipality will benefit from a more predictable revenue stream through fixed charges, there is limited corresponding benefit to ratepayers. A direct consequence of such charging structures is that households consuming very little or no electricity still face a substantial and unavoidable monthly bill, which can contribute to financial strain and the accumulation of debt.
In the past, households were able to significantly reduce electricity-related expenditure by reducing consumption. The introduction of higher fixed charges has reduced the extent to which overall monthly costs can be adjusted through usage alone.
This is a significant concern in the current economic climate, with many households under financial pressure.
Since the municipality will now be collecting additional revenue through fixed charges applied in a manner not previously used, the municipality’s claim of “revenue neutral” restructuring warrants clear supporting evidence.
OVAC raises concerns regarding whether the requirements of procedural fairness under the Municipal Systems Act, the Municipal Finance Management Act, and the Promotion of Administrative Justice Act were fully met, particularly in relation to the apparent non-disclosure of the Cost of Supply study for public comment and the extent to which public submissions were received and meaningfully considered.
Anton Kruger
OVAC
