MAKHADO (LOUIS TRICHARDT) – Businessmen experienced the sudden increase of 83% on their basic electricity charges as unfair and irregular.

Speculation arose as to whether a shortfall in the municipality’s budget and possible overexpenditure could have led to the idea to collect more from the business sector.

In the meantime, residents received outrageous accounts due to wrong meter readings, contributing to the perception that administrative blunders abound.

In the 2004/5 budget speech of the Makhado Municipality on June 1 this year, it was stated that electricity will be increased by 3,5% while other services will be increased by 7%.

One business man said that, in principle, an increase of 83% is unfair and asked what would happen if his businesses would issue an immediate increase of 83% on its accounts. He said that his business would surely lose all its customers.

Mr Peter Magwala, Director Corporate Services of the Makhado Municipality, said on Tuesday that, although the increase was 3.5% to be implemented on July 1 this year, the increment for businesses was more. Mr Magwala said that the findings from the NER (National Electricity Regulator) concerning Makhado Municipality was that Makhado’s Business Energy rate is very high and that the basic charge is very low. The energy rates “are killing the people,” Mr Magwala said. Council adopted the recommendation to increase the basic charges for business.

The basic electricity charges (excluding VAT) for businesses was increased from R121 to R221.65 from July 1. According to the Makhado Municipality electricity bylaws issued during the first week of June this year, a tariff increment would be phased in over three years to reach the recommended basic charge of R221.65 as per the recommendations of the NER. Mr Peter Magwala said that the municipality followed the NER’s recommendation of a basic charge of R221.65 for businesses. The letter was dated October 29, 2003.

At a Council meeting in January this year, Council resolved that, with regard to business electricity tariffs, the NER’s proposal of a limited energy charge of 27,25c/kWh and a basic charge of R221.65 be taken into account in the estimates for 2004/5. The business electricity tariff alternative was a single energy rate at 52,19c/kWh without a basic charge.

In the same meeting Council took note “that the calculated loss in revenue for the 2003/4 financial year, due to the NER-approved tariffs, amounts to R6 671 940, and that the budgeted surplus for electricity will be a (deficit) loss in the electricity account.”

Mr Magwala said that there is a perception that the municipality has a shortfall in the budget and that the shortfall must be recovered from the business community. This is not the case, he said.

“The business people are paying their tariffs as prescribed by council.”

The comment of the Chairpersons Association on the 83% raise in basic charges was “as far as it knows, not disclosed to the public and especially the business community. The CA considers the raise as unacceptably high and this was not transparently handled by council.”

The Chairman of the CA, Mr André Naudé, said that the impression was clearly created that the 3.5% raise would be implemented, while not disclosing that basic charges for businesses would be raised by 83%.

“Council should not treat its business partners in such a manner,” Mr Naudé said.