Mixed views over rates and tariffs changes

The City says the drought crisis has an impact on the proposed increase in the water tariffs.

There has been a mixed reaction to the proposed City of Cape Town budget which includes several changes to rates and tariffs.

The Cape Town budget is currently open for public comment and if it is approved, will come into effect on July 1. They also said that the current drought in Cape Town has has an impact on the proposed water tariff increases.

Homeowners can also expect to pay more for electricity.

Under the new scheme, people in homes valued at R400 000 or more will no longer get their first 6 kilolitres of water free and those with homes worth more than R1 million or more will be hit with a monthly R246 electricity charge.

The proposed capital budget for 2017/18 is R6.8 billion and the operating budget is R37.5 billion. This means a total of R44.3 billion for the 2017/18 financial year.

The City’s proposed rates and tariffs structure for electricity is an average of 3.34% – down from 7.78% last year; refuse an average of 6.51% – down from 7.92% last year; disposal an average of 8.32% – down from 12.08% last year and water an average of 19.25% – up from 9.75% last year.

In her budget speech, Mayor Patricia de Lille said: “While there is a proposed tariff hike of 19.75%, this is a year-on-year increase for Level 1 water and sanitation tariffs. Due to the increase imposed since the implementation of water restrictions, residents have already been paying more at the Level 2 and Level 3 reduction tariffs.

“Due to refinements in the pricing model for Level 2 and 3 reduction tariffs, the proposed increase at the Level 3 reduction tariff (currently being applied) actually only varies between 1.4%, 5.85% or 7.33% on the domestic tariffs, depending on the amount of water being used. Only those using in excess of 50kl will see a 19.19% hike in July 2017 if the proposed rates are approved in May.”

The City of Cape Town, in a statement this week, also said that there was only 23.3% of water left with dam levels effectively at 13.3% as the last 10% of a dam’s water is mostly not useable. The City has lowered the collective water usage target to 600 million litres per day while stricter water restrictions could also be on the cards soon, subject to due process.

The City’s mayoral committee member for informal settlements, water and waste services; and energy, Xanthea Limberg, said: “Those who use more will continue to be heavily penalised but we do not want more money from higher tariffs – residents must use less water. The climatic conditions continue to be erratic and it seems as if many water users respond directly to that; in other words, they use more water as soon as it heats up, but seemingly also when there is rain. This is not sustainable. We must use water in a consistent manner during this time of crisis.”

The City added that the exploratory phase of a pilot project for the extraction of water from the Table Mountain Group Aquifer (TMGA) is expected to begin near the end of June, pending relevant processes. “At this stage, the foreseen yield is approximately two million litres per day.

“This is because we are taking a precautionary approach to determine the sustainable yield of the TMGA and to prevent over-abstraction and environmental damage, Ms Limberg added.

Jenny McQueen, chairperson of the Green Point Residents’ and Ratepayers’ Association (GPRRA), said they were pleased that the rates increases were lower.

This is the rational response to the (R1.8bn) over-collection that we highlighted in the last annual financial report.

“The mayor and Ms Limberg have spoken about removing the free water allowance for homes above R1m. Whilst we support the increase in water tariffs as part of a tactic to reduce demand, we feel that removing the bottom tier free allowance will act as a disincentive to frugal users; it may support the selfish argument ‘If I pay for it I can use as much as I like’.”

Osman Shaboodien, chairperson of the Bo-Kaap Civic and Ratepayers’ Association, also questioned the water tariffs.

“Households are put in different categories and the drought resulted in pushing up tariffs, even if water use does not exceed the norm. To ask for such a big increase now is unacceptable. It is crises management and the citizens must pay. The city is already unaffordable to live in. We call on our City to be proactive and address the crises before it happens. That is what we pay them for.” He added that the budget should be viewed within the context of both the past and present.

Chris Willemse, chairperson of the Camps Bay Residents’ and Ratepayer’s Association, said he could understand the City’s intention of increasing water tariffs, given the current drought. However, he said that the City should be using the income to fix the infrastructure in the city.

Meanwhile, the Cape Chamber of Commerce welcomed the City Council’s draft budget proposals which it said feature the lowest rates and tariff increases in 10 years. Janine Myburgh, president of the chamber, said: “We had a decade of above inflation increases and we can only hope the new round of increases proves to be a turning point.”

Ms Myburgh added they understood that some of the increases, such as electricity tariffs, had been unavoidable and it could understand the sharp increase (nearly 20%) in the proposed water tariffs. However, she said there could have been better planning to avoid the current water shortage being experienced in Cape Town. “We should not forget that the water crisis would have been less serious if there had been better planning and the council had made more recycled water available to industry.”