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Businesses crippled by electricity tariffs

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Small businesses in Kensington’s Bunney Street are facing an uphill battle to keep up with high electricity tariffs. After an increase in tariffs across the City of Cape Town, business owners here say they can barely make ends meet with the exorbitant amount of funds they have to put into paying the City’s rates.

While VOC News visited most of the businesses in Bunney Street on Thursday, two businessmen candidly opened up about making ends meet. Mohamed Hendricks (not his real name), the owner of Savoy Barber Shop, opened his latest bill from the City, expressing shock at the figures in front of him.

“With this one, I’m still in arrears even, I can’t keep up because of how much they expect me to pay,” he said.

Further down the road, Khader Dawood, who owns a supermarket and bakery adjacent to one another said he never received an explanation from the City on the reasoning behind the increase in tarrifs. Dawood, like many others, have pointed fingers at the City for attempting to exploit small businesses.

“Between the bakery and the [shop] every month … the electricity goes up to about R7 000. On top of that I still have to pay wages, water and other utilities; I make just enough to have something to eat. […] The City never told me, and I don’t think they told others why the rates for electricity went up, it just happened,” said Dawood.

“No businessman around here can tell me he’s making enough not to worry, he’s just making enough to survive, tomorrow morning he has to wake up and worry about how he’s going to keep going on with his business.”

Despite the high cost of electricity, he will continue to keep his doors open.

“I’m not going to let this thing keep me down,” Dawood exclaimed.

But for A. Parker [who wished to withhold his first name], who runs a bakery supply store a block away from Dawood, the end may be near if electricity tariffs are not relaxed very soon.

“I’ve been here for [nearly] fifteen years now, and right now I am already thinking that I may have to shut down next year,” Parker said.

Parker says at the moment he is making little to no profit, all his finances return into restocking his store, and paying for a nearly R7 000 electricity bill every month.

“I’m not actually making anything; I stay open to keep the business running. I have my family in the shop and I need to see to them as well. Also I can’t push up my prices because the customers will just go elsewhere.”

At other stores VOC News heard similar stories of businesses surviving hand to foot, being held back under the weight of electricity tariffs whose increase was never explained to them.

However, the Electricity Department within the City of Cape Town insists all changes to the tariff system had previously been publicly advertised.

For local businesspeople, the main concern is the City’s decision to move small businessowners from the small power user 2 tariffs, to the more costly small power 1 tariffs.

According to the City’s principal technician for tariff development, Gary Michael Ross, the changes were motivated by the fact that in terms of revenue, the small power 2 tariff was currently a credit risk. As a result, they decided that those tariffs for small businesses would only be available on prepaid meters, and not the regular meters.

Despite this, he insisted the City had advertised the changes in various community and major newspapers in February, before re-advertising them in May once the changes had been approved.

“The February advertising was for public comment. The public had 30 days to actually send comment to us on the proposed changes, and every comment we got we have to respond to by law,” he said.

Furthermore, he said the City had put notices on the accounts of those who were going to be affected by the changes. Those notifications were publish in May and June this year.

For those seeking to return to the power 2 user tariffs, Ross said consumers merely needed to come into the department and apply for a prepaid meter to be installed instead. This would allow them to be immediately reclassified under the small power tariff 2 category, even though there would be a delay between application and installation of the actual meter.

“We’ve change the metering requirements for the small power 2 tariffs, but you can still get it. All you have to do is put a pre-paid meter in,” he said.

He added that those who applied for a prepaid meter before the 1st July would not have experienced the changes to the small power tariff 1. VOC (Mubeen Banderker)

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