The Lifeline electricity tariff is a subsidised tariff aimed at providing support to low income households. Lifeline electricity is provided at below cost of supply and is subsidised both by National Treasury and by a range of residential and commercial electricity consumers who pay above cost of supply rates. An enabling service, electricity contributes to the health, access to education and well being of citizens. As such, it is essential to ensure that low income households also have access to affordable electricity. The Lifeline tariff has two components:
1 an allocation of Free Basic Electricity (FBE), and
2 a subsidized, below cost of supply tariff, up to consumption of 350kWhs (units) .
National Treasury allocates funds to local authorities for a maximum of 50 kWhs of Free Basic Electricity per low income household. The local authorities determine how best to implement the Lifeline tariff and allocate the FBE. Acknowledging that 50 kWhs does not go far, a number of local authorities offer more. Cape Town provides 60 kWhs of FBE to Lifeline consumers who use less than 350 kWhs on average and 25 kWhs of FBE to Lifeline consumers who use less than 450 kWhs each month. There is a shortfall in what it costs to provide the Lifeline Tariff to lower income households and what the local authorities get from Treasury. This shortfall is made up from the revenue generated by electricity sales from the rest of the city’s consumers.
How do local authorities identify who qualifies for the Lifeline Electricity Tariff?
Three measures are used:
1 People identified as indigent by virtue of their municipal property valuation of R400 000 or less and income status. Two categories of rebate: income of less than R4000 and less than R6000 per month.
2 People who qualify for a senior citizen or disabled persons rebate.
3 Low income households with a monthly electricity consumption of less than 450kWhs.
Qualifying households need to have or install a prepaid electricity meter (except in the case of senior citizens).
Note that if a customer is registered as indigent in terms of the Credit Control and Debt Collection Policy, the property valuation and metering requirements fall away. For criteria for indigent household rebate go to: https://www.capetown.gov.za/en/rev/Documents/2016-2017%20Forms/Indigent%20Benefits%20Brochure%202016-17.pdf
The requirements for a senior citizen or disabled persons rebate (including Lifeline electricity) is as follows:
A combined household income of less than R15 000 per month.
Over 60 years of age or are registered as a disabled person.
Use of less than 450 kWh per month on average, including any free electricity.
Requirements of the value of the property and a pre-paid meter are waived.
They need to apply each year for the rebate and to stay on the Lifeline tariff. This is because both the household income and the rebate conditions may change. Forms can be downloaded at: http://www.capetown.gov.za/City-Connect/Apply/Financial-relief-and-rebates/Individuals/Apply-for-senior-citizen-support
Old age homes run by NGOs can also apply for a `Lifeline’ electricity rebate.
Households with a monthly electricity consumption of less than 450kWhs.
This category was introduced as a simplistic measure to identify low income households. In practice it excluded large low income households and included energy efficient affluent homes. Middle income to affluent households are responding to rising electricity charges by reducing their consumption through energy efficient behaviour and technology and as a result are benefiting from the Lifeline Tariff. Low consumption on its own is no longer a qualifying factor for the Lifeline Tariff and is being phased out. It is a below cost of supply tariff and was never intended as a reward for energy efficiency. Lifeline customers in more affluent areas with credit meters (monthly accounts) were moved to the Domestic tariff on 1 July 2014. On 1 October 2016 Lifeline customers with a property value of over R1 million with a prepaid meter will be placed on the Domestic tariff.
Residential Electricity tariffs for 2016/17 in the City of Cape Town from 1 July.
|Tariff||Blocks||No of Units||2016/17 incl VAT|
|Lifeline||Block 1 (60 kWhs)||0 – 350kWhs||110.68|
|Block 2 (25 kWhs)||350 +||306,44*|
|Block 2||600 +||228,06|
* Note that the R3.06 per kWh in Lifeline Block 2 is a disincentive to use high amounts of electricity in this tariff. In spite of this high kWh charge, 600 kWhs of electricity on the Domestic tariff is more expensive than 600 kWhs on the Lifeline tariff.
for an explanation of the 2016 /17 residential electricity tariffs effective from 1 July 2016 go to: http://greenaudits.co.za/cape-town-domestic-electricity-2016-new-service-fee/
Kim Kruyshaar July 2017