Electricity shocker in new budget

GEORGE NEWS - The hefty 14,59% tariff increase in electricity is certainly the most talked about segment of the new budget (2021/2022), approved last week by Council.

The steep increase in the electricity tariff is the direct result of Eskom's 17,8% increase to the municipality's bulk purchases, said Mayor Leon van Wyk.

"Over the past decade and longer, the tariff increases granted to Eskom have been substantially above inflation and have had the effect of crowding out much-needed increases for other municipal services. As a service, electricity constitutes 54% of George's own generated revenues from services and rates.

"An increase of 14,59% therefore forces lower than required increases for other services to ensure that the overall municipal tariff increases remain within affordability limits for consumers. The resultant negative effect is that much-needed cost-reflective tariff increases for other services can't be undertaken."

It is important to keep in mind that the municipality, too, needs electricity for its own use in buildings, for streetlights and pump stations. This amounts to about R50-million, which is 8,2% of what they purchase from Eskom.

"This is a cost that we have to absorb in the tariffs that we charge our customers," said Van Wyk. The municipality's bulk purchases of electricity will increase from R523-million to R613-million, as a result of the 17,8% increase in Eskom's tariffs.

The following municipal tariff increases will be in effect from 1 July 2021 to 30 June 2022:

Electricity: 14,59%
Rates: 6%
Water: 6%
Sanitation: 6%
Refuse: 4,5%
General tariffs:2,0%

Major projects
On the positive side, there is much excitement about an amount of R370-million allocated for major infrastructure projects in George. "People are talking a lot about our ageing infrastructure," said Van Wyk. "An investment in infrastructure attracts investors, which will secure job opportunities. We are already getting calls from businesses that want to settle here."

Portfolio Councillor of Finance Dirk Wessels said the budget can be seen as a stimulus package with a "back to the basics" approach.

"We want to stimulate economic growth, coming after the economic slowdown resulting from Covid-19," he said.

"Many jobs will be created from the investment in infrastructure and later spin-offs as the economy expands."

The integrated development plan (IDP) for 2021/2022 was also tabled last Thursday, 28 May. Those in the accommodation business will be relieved to know a 30% rebate on toilet tax was approved. More good news includes a provision in the budget for the erection of trade stands for informal traders in Pacaltsdorp and Touwsranten.

An amount of R370-million is allocated for major infrastructure projects in George.