Metros derive ‘substantial profit’ from electricity sales, the Treasury says

Business Day Live 3 December 2012.

METROPOLITAN councils generate a “substantial profit” from the sale of electricity, the Treasury said on Monday in a report on the consolidated operating and capital budgets of 278 municipalities over the next three years.

This issue is controversial as business has complained that high municipal electricity tariffs are having a negative effect on enterprises and undermining their international competitiveness.

The report showed that metros expected revenue from electricity sales to increase by 17.5% in 2013-14 and by 15.8% in 2014-15. This is related to Eskom’s tariff hike application of an annual average of 16% over the next five years. Municipalities purchase bulk electricity from Eskom, which they sell on to consumers at a markup…

(Editor’s note: I think it is time that the legislation was changed to allow NERSA to regulate the municipal tariffs. Perhaps any Eskom increases could be passed on absolute c/kWh terms rather than applying the full Eskom percentage increase to the existing municipal tariffs.)

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