The vast majority of indigent households served by City Power, the municipal electricity distributor for the City of Johannesburg, are in for a nasty surprise with massive cost increases from July 1, says Chris Yelland, Managing Director of EE Business Intelligence.

The Johannesburg Metropolitan Municipality council has approved major structural changes in prepaid meter electricity tariffs and tariff rates submitted to the National Energy Regulator of South Africa (NERSA) for approval and implementation next month.

For its so-called “residential prepaid high tariff”, which applies to the majority of low-income customers with prepayment electricity meters, City Power has proposed a 12,5% increase in its variable energy tariff rates for the 2024/25 financial year. City Power has also applied for an additional fixed cost of R230 per month.

The residential prepaid low tariff applies to households in areas served by City Power that are currently formally registered and appear on the indigent register of the City of Johannesburg. The residential prepaid high tariff applies to all other households with residential single-phase prepayment meters in areas served by City Power.

National Treasury has allocated an equitable share grant to the City of Johannesburg for free basic electricity. This grant is intended for approximately 950 000 indigent households in the metropolitan area of Johannesburg. However, the city’s own data indicates that around 670 000 households live below the lower-bound poverty line. Surprisingly, self-reported data from the city in the annual StatsSA non-financial census of municipalities suggests that just under 30 000 indigent households are registered to receive free basic electricity.

This means 95-97% of all indigent households in the Johannesburg area are not on the indigent register and are, therefore, subject to the residential prepaid high tariff increases.

The average low-income household consumes around 200 kWh of electricity each month. In 2023/24, this usage would have cost R482 per month. In 2024/25, the cost for the same electricity consumption will be R774 (see table). This represents a 60% increase within one year.

Between 640 000 and 920 000 indigent households in Johannesburg will be very surprised and shocked, and maybe even a tad angry, if NERSA approves the city’s new prepayment electricity tariffs.

The residential prepaid high tariff applies to 95-97% of all low-income households in Johannesburg.