The City of Johannesburg’s new R230 fixed service charge on its prepaid high-usage electricity tariff, effective July 1, was implemented without fair consultation or communication and should be scrapped, says advocacy group Organisation Undoing Tax Abuse (OUTA).

“For many residents, particularly low-income families who rely on prepaid meters to manage their electricity usage, this extra R230 a month is an insurmountable expense. It effectively penalises these households for their efforts to control and reduce their electricity consumption, undermining the principles of fairness and equity,” says Julius Kleynhans, Executive Manager for Local Government at OUTA.

The city’s poor communication and lack of public engagement raises serious concerns.

“The city may have the executive powers to apply service charges but this fixed service charge on prepaid was poorly publicised, badly implemented and pushed through with little to no consideration of the consequences,” says Julia Fish, Manager of JoburgCAN, which is an initiative of OUTA.

JoburgCAN challenged the new service charge in the city’s Integrated Development Plan and budget public-participation processes. Although the city reduced the planned charge, it refused to scrap it.

The city depends on its indigent register to apply its exemption policy to prepaid users but there is reason to believe it is outdated and that many households entitled to the subsidy are not registered, Fish says.

“Despite multiple requests for information on the number of households on the indigent register, the city has not responded. Tokens do not include vital information such as how much money was allocated to the charge, to VAT and to actual electricity units. The lack of transparency does not meet mandatory regulation compliance.”

The City of Johannesburg’s response states that post-paid consumers already have infrastructure-related charges built into their monthly billing.

Johannesburg Mayor Kabelo Gwamanda says the surcharge was initially proposed in 2018 but was not put into effect due to the impact of COVID-19. He says the city did not charge all the required fees and only applied them to post-paid customers. However, due to the financial strain on the city’s budget, the decision was made to include the other 50% of customers who are on prepaid plans.

“While we understand the challenges City Power faces in maintaining and upgrading electricity infrastructure and addressing revenue shortfalls, we believe there are alternative measures that can achieve these goals without placing undue stress on residents,” says Fish.