South Africa

Consumer outrage: City Power’s billion-rand profits unveiled

City Power profit rip off

If there is one thing guaranteed to make the blood boil of consumers in our cities it’s that electricity supply is patchy, thanks to load shedding.

But what will make them blow their tops is the fact that municipal power utilities are making a fortune out of that unreliable power supply.

It is shocking to discover, as Moneyweb reports for us today, that Johannesburg’s electricity utility, City Power, makes an annual R7 billion in trading profit from the sale of electricity, at an astonishing margin of 29%.

This all takes place against a background of Johannesburg’s post-paid electricity users being gouged the highest rates in the country for their electricity.

Not only that, the City Power windfall – which is out of all reasonable proportion to the costs of buying and delivering electricity to its customers – is happening at a time of load shedding, which should mean it is selling less.

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It is also a fact that Johannesburg had one of the highest uptakes of solar installations in both the business and domestic sectors in the country, which should also reduce the demand for power.

This all should add up, in a city which is predicated on service, as opposed to exploitation, to power prices which should be reduced.

However, Johannesburg, like most other metros and towns in South Africa, is dysfunctional in the sense that revenues from cash cow sectors like power supply are being diverted to other areas where revenues are not adequate… often due to nonpayment by customers.

An example of that in Johannesburg is Soweto, where nonpaying electricity users have been allowed to rack up a debt of more than R10 billion, which looks as though it may eventually be written off entirely.

In that sort of atmosphere, you’ll start to find more and more people defaulting, as a protest against being ripped off.

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