While small businesses in Pietermaritzburg will suffer because of the basic electricity charge shooting up, the flipside is that bigger businesses prefer it to a usage tariff increase.
The municipality finalised its electricity tariffs this week with
commercial tariffs rising from R46.66 to R661.35 for the users of less electricity (80 amps), and from R81.65 to R861.80 for those using more (100 amps).
The tariffs were finalised late because the municipality imposed a 10 percent increase on electricity from July without the National Energy Regulator’s (Nersa) approval.
Nersa ruled that only 7 percent could be imposed. It later sent the municipality its own recommendations of what the increases on basic charges should be.
The municipality implemented all the recommendations, except the basic charges for domestic users.
Chief executive of the Pietermaritzburg Chamber of Business, Melanie Veness, said yesterday larger consumers of electricity would not be affected to the same degree as smaller users because the basic charge was a small component of their electricity bills.
“Being large consumers of electricity means that the difference between paying 7 percent and 10 percent is far more significant than the increase in the basic charge.”
But for small businesses, the implications were huge. Those whose electricity bills came to less than R500 a month would now be paying more on basic charges than the electricity they used.
“No one is expecting to have their electricity costs doubled overnight. And, because there has been no warning, many entrepreneurs are likely to find themselves in a precarious situation.
“Their margins are often very small and they will obviously not have factored in this cost when costing their products and services. I am very concerned that many of the smaller enterprises will find this difficult to assimilate.”
Businessman Ismail Dhoda, who is the chairman of the Mountain Rise Residents’ and Ratepayers’ Association, said most of the small shops in the CBD were owner-run.
“These people are barely making ends meet. They are small guys trying to survive and make an honest living. They will feel the pinch and it will discourage them,” he said.
He added that these businessmen could not increase their prices because customers would shop elsewhere. - The Mercury
