Households have been handed a reprieve, with the Nelson Mandela Bay Municipality now set to implement lower electricity hikes from next month.
Instead of the 3.8% increase approved by the council last month, domestic users will now pay an average of about 1.8% more for power.
Small businesses are also set to score, with slightly lower increments than the municipality was hoping for.
The changes come as the National Energy Regulator of SA (Nersa) rejected the city’s proposals, saying it had to be adjusted to the regulator’s original benchmark of 1.8%.
While it is good news for the consumer, the move will hit the metro’s finances hard. It means the municipality will have to do without about R32.6-million in extra revenue it was hoping to get from electricity sales.
Last month, the council approved an R11-billion budget with a deficit of R125-million. The changes to the electricity tariffs will push the deficit up even further.
The municipality’s portfolio head of budget and treasury, Retief Odendaal, however, believes the metro will be able to bounce back.
“When we approved the electricity tariffs in May, it was subject to Nersa’s approval,” he said.
“They have since come back to us and said they agreed in principle with our proposal, although there are a number of changes they want to see reflected.
“These changes ensure that domestic customers pay a slightly lower rate than was proposed previously, and it saves certain categories of businesses.
“We’ve looked at this and we believe as an institution we can live with it.”
Adding to the pressure on the municipality’s finances is a decision by the council yesterday to forgo any hikes on miscellaneous charges in the public health department.
The council decided to keep the rates charged in the current 2016-17 financial year unchanged instead of implementing increases of about 9%.
This includes charges for various things, such as impounding of livestock, boat registration, waste disposal and burial sites.
At yesterday’s council meeting – which was a continuation of Wednesday’s meeting – city manager Johann Mettler said not implementing the increases would have an impact on the budget.
“Normally, as part of the budget, we will indicate what the shortfall would be on the budget,” Mettler said. “In this case, the council has all the right to make this decision. However, the only unknown is the anticipated shortfall.
“That will have to be calculated and be part of the documentation to the national Treasury.”
The EFF, Patriotic Alliance and United Front all argued that they would not support any hikes on the miscellaneous and cemetery charges, saying residents were burdened enough with high costs.
The councillors unanimously approved the unchanged tariffs.