George water tariff increase explained

GEORGE NEWS - George Herald recently reported on Dr Dennis Farrell from Business Café questioning an alleged discrepancy in the water tariff that George ratepayers are being charged since the annual increases in rates were implemented in July 2023.

The water tariff increase as stated in the 2022/2023 budget is 11%. However, the percentage increases calculated from the rates on one's municipal account are more than double this.

Calculated off the old tariff per kilolitre, the increase is 24,43% (R19,44 increased to R24,19) in the water usage rate (the base rate and not the punitive tariff for high usage).

The increase in the basic water charge is 25,32% - from R111 to R139,11.

George Municipality has responded as follows in a statement issued recently:

The determination of tariffs and a yearly budget is a complicated project entailing months of planning, estimation of future usage of resources and services and income derived therefrom, the impact of future expenses, amendments to legislation etc.

Legally, a local government must provide National Treasury with a funded budget, for it to receive funds from National Government level, otherwise the Council will be placed under administration, and could even be dissolved, until a funded budget is prepared.

Council must approve the annual three-year budget. Council, for the 2023/2024 budget period, approved an 11% increase in the income derived from water provision and usage, not a straight-lined 11% increase in a specific tariff.

An overall 11% increase to cover costs

What Council approved in other words, is that tariffs, basic charges and consumption rates must be adjusted so that the total income that the municipality derives from the provision of water services for the year budgeted for, increases by 11% in order to cover the costs associated with supplying the service.

Monthly charges for water include a basic charge, and a stepped block tariff rate for water usage. The stepped block tariffs cover seven different tariff blocks, over 25 different categories of consumers across George, Haarlem and Uniondale.

Combined, the overall tariff structure needs to be cost reflective in terms of Section 74 (2)(d) of the Municipal Systems Act, No 32 of 2000.

Additionally, it may include an increased rate for water usage if you exceed certain imposed limits, in times of emergency, as indicated in the emergency water rates.

During the process for the current budget there was an internal indication, as well as guidelines from National Government, that the basic charges for services, including water, must be adjusted upwards, as basic charges in many municipalities do not cover the cost of the infrastructure upkeep and improvements necessary to provide potable water to the public.

In addition to the urgent need for essential maintenance, the expansion of the existing infrastructure networks is a major focus area.

Consequently, basic rates were in fact increased, but because of that increase, and the consequence of the 11% cap imposed by Council on the increase in funds from the provision of water, some rates for actual water consumption were increased by as little as 0% - 1% in the stepped block tariffs across the various categories.

These low consumption increases cover 73.96% of the average daily demand across the George Municipal area.

A full schedule of all the increases in basic charges, base rates, increased rates, and emergency tariffs is available on the municipal website, and can be summarised as follows:

The stepped block tariffs cover the basic cost, and seven different tariffs blocks, for each of the above 25 categories:

This means that for each of the above 25 categories of consumers, there is a basic cost and a stepped block tariff.
For example, for the George Domestic category the tariff block would be:

These tariffs have been benchmarked against several similar sized municipalities for assessment of the overall cost reflective water tariff structure.