Mayco member for finance and Executive Deputy Mayor, Ian Neilson responds to a recent letter about the tariffs and rates. Picture: David Ritchie/ANA Pictures
Mayco member for finance and Executive Deputy Mayor, Ian Neilson responds to a recent letter about the tariffs and rates. Picture: David Ritchie/ANA Pictures

City of Cape Town’s tariff and general valuation explained

By Opinion Time of article published Aug 4, 2021

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by Ian Neilson

Thank you for the opportunity to respond to a letter about the tariffs and rates (“LETTER: Is the City using deceptive language when announcing annual utility tariff hikes?”).

It is sad that the immediate conclusion by the letter writer is that the City telling customers the increase per tariff category in cents and not percentages, is some form of deception.

The tariffs are reflected in many ways in many communications and channels. The communication referred to by the letter writer is intended to be a customer-friendly one, where rather than give percentage increases per tariff category, that mean nothing in the budget planning of a customer, the City has given the cents increases per tariff category.

Electricity is used as an example by the letter writer and the mention of a 13% increase.

As has been communicated, there is a 13.5% Eskom-driven increase this year. The City has absorbed more of this cost than any other metro. Some 65% of the electricity tariff income is just to buy the bulk power from Eskom. And this now costs 17.8% more for municipalities due to the Eskom increase.

The City’s operations are efficient from work done over the years to enhance business operations. It is only because the City manages its distribution network effectively that we are able to bring our tariff increases in lower than the Eskom charges.

Added to this, City customers are more often than not, protected by at least a stage of load shedding, and sometimes they are the only ones in the country that are protected from load shedding in its entirety.

Regarding the general valuation, the City clearly states an average increase of 4.5% in the applicable communication.

The values of the 2018 general valuation remain applicable for the 2021/22 financial year, so it is not correct to claim that there is a further increase in addition to the 4.5%.

The City communicated, via a range of community paper adverts and on the City’s website, that the current property valuations are valid until June 30, 2023. The Council approved a four-year cycle for the current general valuation cycle – the 2018 General Valuation Roll and related Supplementary Valuation Rolls.

The profound impact of Covid-19 and the national lockdown periods have made it very difficult for normal market related property transactions to take place. This lack of sufficient evidence in an unstable property market could result in locking in unfair property valuations for the full term of any new valuation cycle.

* Alderman Ian Neilson, Mayoral committee member for finance and Executive Deputy Mayor.

** The views expressed here are not necessarily those of Independent Media.

Cape Argus

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