Nelson Mandela Bay faces electricity crisis: proposed 12.8% tariff hike sparks controversy

Daily Maverick

04-06-2025

Citing spiralling non-technical electricity losses, the Nelson Mandela Bay Municipality's application for a 12.8% electricity tariff increase has revealed that the metro's electricity department will not generate any revenue or surpluses this year. However, there is some relief for old-age homes and residents of housing estates and residential complexes.
'The phenomenon of increasing electricity bulk purchases and spiralling decreases in electricity sales has reached unprecedented levels, to the point where the electricity service has become unable to generate its own revenue or any surpluses as per the historical model for this service,' the Nelson Mandela Bay municipality stated in its application to the National Energy Regulator of SA (Nersa) for an increase of 12.8% across the board for all categories of electricity users.
The metro's non-revenue electricity losses for the financial year that ended in March 2025 stood at R1.049-billion, caused by factors including meter tampering and illegal connections.
The draft budget for the metro, which was noted last week by the city council and was scheduled to be debated on Thursday, 5 June, also stated that the electricity department would have to be subsidised by municipal rates to remain viable.
Opposition parties said the electricity department would bankrupt the city if a successful turnaround plan were not implemented.
Earlier this year, the metro's executive mayor, Babalwa Lobishe, tried unsuccessfully to have R449.8-million relating to 30 tenders in the electricity department written off without the matter being investigated by the Municipal Public Accounts Committee.
Nersa has, this year, decided to make all the municipal applications for electricity price increases public and has asked that the public send their comments.
'Nersa requires that all municipalities calculate their electricity tariffs based on the costs incurred in supplying customers,' said Nersa spokesperson Charles Hlabela. This is a legal requirement in line with a high court ruling obtained by the Nelson Mandela Bay Business Chamber.
'This requirement will be enforced to all municipalities for their 2025/26 electricity tariffs. Should the municipality fail to comply with this requirement, it will face a risk of having its tariffs not approved,' said Hlabela.
He said Nersa valued input from all stakeholders and would consider written submissions alongside a thorough analysis of each application.
Further issues were also touched on by the metro in its application.
In its motivation for the electricity tariff increase, the municipality stated: 'The business of the Electricity and Energy Directorate is continuously plagued by a scourge in electricity theft, tampering and illegal connections as well as tariffs which were historically not cost reflective.'
The metro, which derives R7.5-billion a year from electricity sales, said two main factors had led to the increase:
Eskom bulk purchases had been increased by 12.74%; and
Municipal salaries had been increased by 7.75% in line with the collective bargaining agreement.
The metro said it was gearing up to implement an advanced metering infrastructure programme to reduce energy losses, improve revenue protection and enhance operational control.
Some relief
It offered some relief for residents of residential complexes and old-age homes, who had been incorrectly billed under the industrial and commercial bulk supply tariff, 'despite the actual end-user being classified as a residential customer in the NMBM Consolidated Billing System.
'This also comes as a direct result of numerous complaints received from this cohort of customers who deemed the current tariffs unfair, as they were being treated in the same way as businesses due to the tariff structure.'
The application acknowledged that 'preventative maintenance and innovative switching methods can be game changers, ensuring that the system can handle fluctuating demand while reducing unexpected failures.
'A proactive approach could also lead to efficiencies in resource allocation as preventative maintenance often costs less than reactive repairs.'
However, the application continued, 'It is unfortunately not possible to increase the Repairs & Maintenance Funding Allocation to the desired level.'
The metro promised to do so within the next three years.
It said there was no 'growing interest' from private generators or businesses looking to take advantage of wheeling arrangements.
'Illegal connections, tampering with metering equipment, infrastructure vandalism and access to properties are the dominant challenges faced in some of the electrification areas. Customer education, awareness interventions, audits and replacement of illegal connections with legal connections continue to receive special attention.
'The influx of people migrating to the metro and the associated need for accommodation result most of the time in the illegal construction of informal housing, contributing to the Electrification Programme complexity,' said the metro in its application. DM