OUTA says City Power prepaid deductions ‘not thought through’
The Organisation Undoing Tax Abuse has called on City Power to provide more clarity on the new deductions for prepaid electricity users in Johannesburg.
The R200 monthly fee, introduced on 1 July, is meant to cover network and service charges.
OUTA CEO Wayne Duvenage said it’s still unclear if residents will be able to challenge the new fee in court.
“Before you purchase one electron of electricity that you're going to get from the city, the first R230 is going to be sucked out of your payments towards a network fee," said Duvenage.
“We don't believe the city has applied their mind to a number of consequences and issues that are going to arrive from this matter.
“They don't give clarity on how many users fit into the different categories of poor- middle- and higher-income users. We are not seeing enough feedback and information regarding those questions.”
“Another question is, for instance, if I buy my prepaid electricity for the next three months. So let's say… don't purchase any prepaid electricity in the following month because I've still got credits on my prepaid account; what happens when I come to buy electricity three months later? Do they deduct R230 a month for the two months that I haven't bought electricity?”
“They can't answer these questions, so it becomes a problem, especially when you’re multiple household users that contribute to electricity tokens purchases on prepaid. You know who's going to pick up that initial network fee, so I don't think the city has through this very carefully.”
Duvenage believes new payment was extended to prepaid meters because of the city's improper management of its budget.
“What we believe the city should be doing is looking at their cost structures, starting out with a zero-based budgeting cost structure. This is because the problem that municipalities often face is they don't go back and question the number of contracts that are in place. They’re merely going to pass on the cost of inflation to their citizens.”
He warned that municipal rates are outpacing some residents’ monthly bond costs.
“This is what's going to cause capital flight; this is what's going to cause people to move to other areas where it's cheaper to live because the rates and taxes are a lot lower.
“The city needs to adopt a different approach, stop just passing on excessive costs and start looking at zero-based budgeting and reducing the costs to become more efficient as a city.
“The city is losing control of its costs at the moment.”
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