NEWS RELEASE                                                                                        13 February 2001

CITY OF CAPE TOWN FORMS WORKING GROUP TO PLAN IMPLEMENTATION OF FREE BASIC ELECTRICITY

The City of Cape Town has formed an Electricity Working Group to plan the implementation of free basic electricity for residential consumers throughout the Cape Metropolitan Area as decided by council at its first meeting in December.

However, a number of technical and legal issues have to be resolved before the policy can be applied in an equitable manner. For example, ESKOM directly supplies about 25 per cent of consumers in the municipal area while the rest are supplied by the municipality at various tariffs set by the previous metropolitan local councils. The an Electricity Working Group hashad discussions with ESKOM with the view of ensuring that all residents in the metro area will benefit from the implementation of free electricity.

At this stage it is envisaged that all metered domestic consumers will receive between 20 kWh of free electricity per month. This equates to about two weeks’ consumption of a small refrigerator or a 60 watt lamp being switched on for five hours a day for about three months.

To recover the estimated cost of between R30 million and R50 million, the City would have to increase tariffs for larger consumers without infringing on the equity principle. Alternatively, subsidization could come from the rates account.

Councillor David Erleigh, the City of Cape Town’s Executive Committee member responsible for city infrastructure, said the DA-led Council had moved fast to ensure implementation of the policy as soon as possible.

“Given the complexity of the technical issues, we have made huge strides in the short time since the council was established in December. Already we have had meetings and workshops at national level and we are expecting a full report to come before the Executive Committee in March,” he said.

“We are totally committed to providing free basic water and electricity in order to improve the quality of life of the very poor and to give them greater access to small business and educational opportunities that are dependent on electricity supply.”

Councillor Erleigh said the Electricity Working Group was tasked with developing a detailed tariff policy and a programme for implementing a free basic component.

“The Group can also co-opt expertise from other directorates and even outside the Council if necessary,” he said.

Both National and local government are in agreement that free basic electricity services should be provided to benefit the poor, but there are fears that national and local initiatives could clash if not efficiently co-ordinated.

In his “State of the Nation” address to Parliament last week, President Mbeki said electricity supply and distribution would be restructured to stimulate investment.

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