Johannesburg's City Power had a mark-up of 117 percent on electricity it obtained from Eskom and resold, which was much higher than other cities in the country and a threat to the manufacturing industry, the National Energy Regulator of SA (Nersa) heard yesterday.
Markus Hannemann, a director at Scaw Metals, warned that if the City of Johannesburg's electricity tariffs continued to increase at current rates, its factory in Johannesburg would close.
Hannemann said the factory employed 1 100 people and provided steel wire ropes throughout the world, largely to the mining industry.
A further 350 people had jobs at the company's 17 branches across southern Africa.
The latest proposed tariff increases by City Power would add R9.2 million to Scaw Metals' annual electricity bill, which the business could not afford.
But Hannemann said only R4.3m of the R9.2m increase was required to cover Eskom's tariff rise and City Power was making an additional almost R5m from it.
He spoke at a Nersa public hearing on an application by City Power to increase its municipal electricity tariff by 27.7 percent, which is above the Nersa guideline increase of 20.38 percent.
Hannemann said the 117 percent mark-up on electricity by the City of Johannesburg appeared to be the highest in the country, despite the city being Eskom's largest single customer. The neighbouring municipality of Ekurhuleni had a margin of 56 percent and Durban a mark-up of 35 percent.
Damon Symondson, a manager at Scaw Metals, said the group was strongly disadvantaged by the proposed tariff increase. Its competitors in Vereeniging and Germiston enjoyed substantially lower electricity tariffs but the group could not relocate its factory.
Symondson said the proposed hikes were "nonsensical" and could not be justified. He appealed to Nersa to consider enforcing a 0 percent increase for City Power over the next three years to bring its industrial tariffs more in line with tariffs in other municipalities.
Sicelo Xulu, the acting managing director of City Power, said it was not the utility's intention to drive business away from Johannesburg and it had a special pricing agreement process.
He said the utility's doors were open to struggling businesses to engage with it.
Xulu cautioned against making tariff comparisons because of factors including different voltage levels and overhead costs, but later admitted that no comparative studies of fees in other municipalities had been done.
Thembani Bukula, the chairman of the hearings and Nersa's regulating member for electricity, asked Xulu to provide as soon as possible the elements that City Power would like Nersa to consider when it did a comparison of tariffs.
Dennis Goldman,the chief electrical engineer at City Property Administration, said rising power costs were threatening the people who were trying to improve their lives and be productive members of society.
