Homeowners need clarity on council plans for pre-paid meters

The Eskom tariff hikes just approved by the National Energy Regulator (NERSA) make it even more urgent for the City of Tshwane and various other local authorities around the country to clarify their plans to ensure that every household has a pre-paid rather than post-paid electricity meter.

“With the minimum 8% increase in electricity costs every year for the next five years looming, consumers need to know with certainty who will pay for the installation of the meters and exactly what, if any, benefits they stand to derive if they have to convert from a post-paid meter to the pre-paid system,” says Jan Davel, MD of the RealNet estate agency group.

“This concerns our industry, too, because the costs of running a home these days, as well as the proper delivery of council services, are a major consideration for property buyers and sellers.”

At the moment, he notes, it seems as though the planned total switch to pre-paid that has already been announced by the Tshwane council and the Msunduzi council – and has also apparently begun to be implemented in Johannesburg – is actually only being considered in terms of the advantages to be gained by the local authorities.

“For example, when Tshwane Mayor KgosientsoRamokgopaannounced the plan during his State of the City address last year, he said quite clearly that it formed the basis of an initiative to ‘secure the financial position of the city’,in that it would give the council the power to ‘clamp down’ on residents who did not pay for other services (like water and rubbish removal) by blocking their ability to load electricity units on their pre-paid cards.”

Davel says it was also interesting to observe at the recent Nersa hearings that the Eskom hikes were not only being opposed by consumer organisations but also by local authorities, under the banner of the SA Local Government Association (SALGA), which said it feared that such tariff increases would induce such widespread consumer defaults on council bills that many local governments would soon be unable to collect enough revenue to sustain themselves.

Meanwhile, he says, consumers should be wary of claims that having a pre-paid meter installed will automatically mean a reduction in their electricity bills. “In fact, Eskom’s own website explains that while a sliding scale of charges applies to all electricity users, the price per unit is actually higher on the pre-paid system than on the post-paid system in every category of usage.

“So the only real way for the consumer on a pre-paid meter to save costs is to use less electricity, just as it is for the consumer on a post-paid meter. Usually, when those who switch to the pre-paid system do see a drop in their monthly electricity bill it is simply because they are no longer paying according to city council ‘estimates’ of their usage but only for the actual units they do use.”

Davel says questions have also been raised about the reliability and expected lifespan of pre-paid meters, about whether they are more prone to lightning strikes than post-paid meters, and about the possibility of corruption in the awarding of contracts for the supply of the many thousands of meters that will be needed to effect a total switchover. There are also many who feel that local authorities would do far better to spend money on sustainable or “green” power initiatives than on pre-paid meter installation.

“However, the other side of the coin is that pre-paid meters do undoubtedly give consumers more control over their own monthly budgets for electricity, instead of having to wrestle with erratic and often inaccurate council billing systems.

“Consequently, the existence of a pre-paid meter is rapidly becoming a significant plus-point for prospective homebuyers, and sellers should thus seriously consider having one installed, even if they have to pay for it themselves.”

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