We built this city

By David Lipschitz 1st May 2025

The City of Cape Town is preparing their biggest ever increase in taxes (rates, electricity, water, sewage, refuse) for people living in Cape Town.

Capetonians who have believed in the future of this incredible country and who continue to build communities and knit communities together should be applauded, not penalised. Now our government wants to destroy that.

The City has already introduced service fees for water and electricity, but it about to get a lot worse; great for visitors and non-working people who retire here, but soon locals won't be able to afford to live in this city anymore, and the visitors will leave when they don't have employees to cook and wash and clean for them anymore.

Destroyed communities leads to more cameras, more lights, more police and more crime.

One should note that the City and DA have fought against the VAT increase, which would have gone to central government, and they said this would hurt average South Africans. Yet at the same time the City and DA wants to increase rates and other fees sometimes by 25% or more.

The City also wants to change water service fees to be by value of property, rather than by pipe supply diameter (size). This is yet another disincentive for people to save water because as you use less water you pay more per kL. This is the same for electricity. As you use less electricity, you pay more per kWh, when the service fee is included. Our water fixed cost is likely to double and it will triple when sanitation is added (how sane is this new tax, which taxes ordinary Capetonians who are subsidisng new entrants to Cape Town who are overloading our systems), and our volumetric cost is likely to go up 25%. Our bin refuse collection tax goes up 34%.

We also know that governments say that new taxes will be low, but this is just until they are accepted. Then the taxes go up faster than inflation!

The way to keep families and communities safe happens when people live in their communities for a long time, when they know each other and when they build together.

See: https://resource.capetown.gov.za/documentcentre/Documents/Forms%2c%20notices%2c%20tariffs%20and%20lists/DraftBudget2025-26_Advert.pdf

There are two completely new tariffs: one for "cleaning" and the other a basic charge for sewage. I already don't like that Sewage is based on water consumption. If Sewage is based on water consumption then it should be based on Winter Water Consumption, as in summer a lot of water is used for watering gardens and filling pools and never gets to sewage! And some suburbs know how to keep themselves clean. Why should they pay for people to don't care what their suburbs look like?

And then the City wants to increase rates by 8%, well above inflation, yet house prices are also going up, so it is possible that some people will get 25% or higher rates increases. This is grossly unfair, as I describe in my email to the City below.

The comment period ends on 2nd May 2025. I have emailed the following comments to: Budget.Comments@capetown.gov.za.

Anyone (adults and children) moving to Cape Town should  pay a R10,000 levy per person which should go to an infrastructure fund.

New owners should pay rates according to the latest house prices, and long term people should be given the benefits they have accrued for building their communities.

People moving from outside Cape Town, buying property here should pay an additional 5% levy on the value of their property to the City Infrastructure Fund, to unburden locals from having their infrastructure overloaded by new people who expect that locals will subsidize their services!

The maximum a rates bill should increase should be inflation plus 2%. This should be retroactively adjusted back to 1994.

A person who saved, paid off their house, should not have any rates increases as an incentive for people to save and not take out unnecessary debt.

Anyone over the age of 60 who still has a bond, should only have inflationary rates increases.

It is unfair for the City to get huge valuation based increases and at the same time increase the cents in the Rand.

People I know who live in squatter camps own property where they come from. In one case, a person owns two properties in the Eastern Cape. In another a foreigner owns a large property in his country. And I have to pay for them to live for free in Cape Town so that they can look poor here, whilst owning property elsewhere.

An additional benefit of this plan is that renters will be protected where they rent from long term homeowners.

Tariff increases will kill incentives to save electricity and water

David Lipschitz Letter to the Cape Times published Mon 8 May 2017 in their Insight Section

THE City of Cape Town has published their draft tariffs for the 2017/18 financial year. Search for "draft electricity consumptive tariffs 2017/18" on the City's web site.

My calculations are based on people living in accommodation valued at more than R1 million. The poor still get their incentives and in fact the poor using more than 350 kWh per month will get up to 23.5% discount of their electricity usage.

And service fees for large users are increasing too, in one case by as much as 120%, so we can all look forward to higher inflation come July when this city, that works for us, makes it more difficult to work with us.

My calculations show that for someone using 600 kWh a month the price increase is 2.8% and someone using 1200 kWh a month the price increase is also 2.8%.

For 600 kWh it changes from R1125 domestic tariff excluding service fee, to R1156 home tariff including the fee, a 2.8% increase.

The 1200 kWh changes from R2493 domestic tariff excluding service fee to R2562 home tariff including the service fee, 2.8% increase.

But 300 kWh changes from R562 to R702, a 25% increase.

And 100 kWh changes from R187 to R400, a 214% increase.

For myself, a few years ago, we were changed from "Lifeline" to "Domestic" and from July this year we will be changed to "Home".

Being incentivised to use less has fallen by the wayside.

Note that the free water allowance is falling away! So if you are using 10 kL a month, and you were paying R66, you will now be paying R98, a 48% increase. Plus the free sewerage component is also falling away, increasing this increase even further.

It seems to me that the financial incentives to save electricity and water will cease on July 1, when these new measures come into play.

At some point, economics says that if you are prepared to pay the price, you can get what you need.

People might choose to buy more water and electricity instead of other luxuries.

And our water crisis will get much worse as people's financial psychological incentive to save is removed.

We might even end up with load shedding again, as people stop worrying about how much electricity they are using and just use as much as they want.

I tend to think that energy efficiency measures will simply go out of the window and people will use as much as they want.

This seems to be the case in my mind, where even though I am a very energy-conscious customer, I just don't see the point of saving electricity and water, when perhaps I can afford to pay the higher rates. There is just no incentive anymore for saving.

The city is putting up their prices. They are telling their customers "if you can afford it, we will supply you; and if you can't afford it, please move to another city".

The free water allowance is falling away, which means that the incentive to do all you can to use less than 6 kL of water a month, and boast about not pay anything, is meaningless.

Grid tie, without batteries, solar electric is already cheaper than City of Cape Town electricity. It could be up to half the price, depending on circumstances. And battery capability is increasing in leaps and bounds and prices are coming down, so we will soon be at grid parity with batteries. Grid parity is where one can make one's own electricity cheaper than one can buy it.

As I've been writing in this newspaper for years, it is time for residents to work together to produce their own electricity and water, at a much cheaper cost than our government can provide it, and in fact sell this cheap electricity and water to the city and to our residential neighbours.

Besides paying or moving, another opportunity is to move into "townships". This way I get a much cheaper house, with all the benefits that come with this, and I can afford to pay for security with the savings I get.

I think we will see enclaves of "rich people" living in the middle of townships, within the next few years. The "poor" won't want to move into "rich" areas, when they see the overtaxed rich, moving to them.

Lastly, existing homeowners who have paid for infrastructure numerous times are in effect subsidising new entrants into the market. New suburbs and new parts of suburbs and densification is happening all over the place. It seems to me that these people are being way undercharged for the services they need.

Lets suppose that a new power station is required for a new suburb.

Why should the entire population be forced to pay for it? And why do new suburbs need external power stations in any case?

• Lipschitz is an energy analyst and owner of My Power Station.

Letter in 30th September 2015 Tabletalk: "Tariff Upset"

The City of Cape Town over the past two years have chased away thousands of customers by removing them from the lifeline tariff and putting them on normal tariffs! in many cases more than doubling their electricity prices.

Most recently the City of Cape Town have told pensioners that if the house they rent is revalued to above R300,000 these renters must pay a higher electricity price!

In 2009 we installed a solar-electric system and qualified for the lifeline tariff, so we applied and got it. Our average units per month are around 300 kWh (units). Then in July 2014, we suddenly started getting bigger bills.

We had been unilaterally and without warning been moved to the "normal" tariff. Our bill increased from R2,857 in the year ended June 2014 to R6,467 in the year ended June 2015. Our units increased from 3,328 kWh to 3,851 kWh in the same period. So our tariff (rate per kWh) increased from 86 cents per kWh to R1.68, a 95% increase in one year!

Out of interest, the reason for the increase in kWh usage was because our geyser started using excess electricity and we had it replaced under guarantee in August 2015. Something went wrong with its insulation. We found this out because we measure our geyser and household electricity usage ourselves, and because we started having brown water from time to time.

What the City should be doing is putting everyone on the lifeline tariff who use less than 600 kWh per month, perhaps only giving free kWh to those who earn less than a certain amount. Reason? As an incentive to use less.

A person who is renting should not be penalised by a homeowner who has their house revalued, for example to get at capital in the house.

In this case, the homeowner should pay the extra electricity cost!

In the case where a house is revalued by the City, the homeowner should apply for a revision back to the purchase price of the property.

Just because houses of a similar size in a particular area are considered to have a particular value by the city and estate agents does not mean that your house has the same value.

One of the oldest problems in South Africa is the discrepancy between rates and utility costs; something our new government has overlooked, even as it tries to right the wrongs of the past.

In the early 1900's, the landowners decided that the utility costs should be high whilst the rates should be low. Landowners can own huge tracts of land without paying properly for this area's maintenance, whilst the renter has to pay relatively high utility prices.

This secret can be found in Professor Renfrew Christie's book "Electricity, Industry and Class in South Africa". The book is available online at https://play.google.com/books/reader?id=n3WjRrnNqCUC... Professor Christie published the book in 1984, whilst a political prisoner at the time.

Of-course someone living in their own home is not penalised. Their rates are higher whilst their utility costs are lower and overall their costs are the same.

The benefit of higher rates is that these are local to each city and municipality and can therefore be more equitably shared where they are raised.

VAT is also saved by the homeowner as their utility bills will be lower and VAT is paid on utility bills. Of-course big landowners are VAT registered and don't pay VAT.

Imagine the City saying come live in Cape Town where, if you use less than 600 kWh per month you benefit by paying less for electricity.

This benefits homeowners and business owners, and will create thousands of jobs in the blue economy.

And Capetonians will also get all the other benefits, like better housing, no toll roads, better security, more jobs, more electricity security and etc.

"Cost reflective electricity tariffs"

"Cost reflective tariffs" in an environment where costs are 3 times higher than they should be:-

http://www.engineeringnews.co.za/…/sadc-ministers-target-20…

The SADC ministers met yesterday and spoke about "cost reflective tariffs". For Medupi this is R1.20 per kWh and for Nuclear R1.60 per kWh.

These are cost prices to Eskom. So homeowners can expect another 100% increases in electricity prices to achieve 'cost reflectivity'.

But: renewable energy is already at R1.50 for homeowners who are paying R2.14 in City of Cape Town!

A friend of mine did 40 renewable energy installs in Cape Town in the past three months. All systems so that people and businesses don't have load shedding.

And we are now very close to grid parity with batteries.

My thesis is that the SADC utilities must work with what I call Rooftop Owner IPPs to solve our energy and unemployment & water & cost of living & pollution crises.

Any other form of intervention is a waste of time and is driving customers away.

Note that I told a this to Ian Nielsen in Nov 2013, and even though he is the CFO of the City of Cape Town, he said that tariffs are the problem.

The sad truth is the SADC governments don't want to work with their electorate, and soon we wont need governments anyway as we take responsibility for ourselves and move back to city states.

TOU and DR for homeowners!!

It's time for Time of Use Tariffs and Demand Response for Homeowners.

Let homeowners decide for themselves if they want to pay more for electricity at peak times and or have load shedding or part load shedding.

And please don't let Eskom say its impossible. I lived in the UK from 1987 till 1995 and we already had Time of Use Tariffs in the UK back then on meters where we paid our accounts in arrears.

http://www.engineeringnews.co.za/article/eskoms-molefe-comes-out-swinging-on-final-day-of-nersa-hearings-2015-06-24/rep_id:3182

Oh, and its about time that homeowners understand these abbreviations:

• TOU: Time of Use Tariffs: paying different rates for electricity at different times of the day
• DR: Demand Response: switching off particular circuits such as cooking, geysers, air conditioning, under floor heating, swimming pool pumps, etc, which don't affect all the things we need to keep running in our houses. And if you are cooking a cake and you don't want the oven to switch off, you press a button and the oven stays on and you just pay a higher rate until your cake is cooked.

Unpublished Letter: 20th March 2015: Eskom's possible 24% Electricity Price increase

On March 19, Executive Deputy Mayor and Financial Director in the City of Cape Town, Mr Neilson, announced that Eskom wants a 22.27 percent increase instead of the currently approved 12.69 percent increase. The City of Cape Town is blaming Eskom for the delay, but the City have already delayed their usual budget announcement by about a month as they have been waiting for NERSA to confirm this higher increase.

The City blaming NERSA for the delay is hypocritical. What isn't hypocritical is the huge increase that consumers will get, not just in electricity prices, but as electricity is in everything, everything is going to increase, including the cost of petrol and diesel which have big electricity components. Considering massive wage increases demanded by union members, plus this electricity increase, one can expect car manufacturers and mines to close down due to this increase and the South African economy is going to suffer, as if a "junk bond" (non-investment grade debt) financial status we also earned on March 19 isn't enough!

The reason the City delayed their budget announcement was because they've been expecting this additional increase! Rumours have been circulating for some time of a proposed 24% increase. NERSA's actual suggested increase is 22.27 percent and historically the City has increased tariffs by more than Eskom, so if Eskom put the price up by 22.27 percent, then we can expect a City increase of more than 22.27 percent.

Note that the after years of very high price increases NERSA moderated Eskom's requests for this year and next to eight percent, but Eskom has already managed to push the increase to 12.69 percent and now they appear to be getting towards 22.27 percent. One should note that Eskom's 22.27 percent increase is close to 17 cents per kWh, so the City only needs to increase their electricity tariffs by about 10 percent to recover this increase, and if they add inflation, then we should expect an increase of about 15 percent!

But the City have never chosen to increase tariffs by the cents amount Eskom have given them, and rather increased tariffs by the same or a higher percentage than Eskom have been given. This is grossly unfair.

For example, if Eskom charges the City 50 cents per kWh and the City charges homeowners R1.70, then if Eskom puts the price up to 60 cents, which is a 20 percent increase, the City could increase the price to R1.80, which is a 5.9 percent increase, rather than to R2.04, which is a 20 percent increase. Taking this into account, the City could "give back" to its homeowners and limit the increase to 11 percent whatever happens, and the City will still not lose any money when looking at the increases the City have already earned over the past seven years. Many more people would come to live in Cape Town, a City which would have relatively cheaper electricity prices than the rest of the country.

The benefit of these increases is that homeowners, including ones in townships, will shortly, with the right financial arrangements, be able to make their own electricity cheaper than they can buy it, including using batteries, and therefore a sea-change will be upon us as everyone gets into the electricity generation and sharing game.

South Africans, inventors and entrepreneurs, will force the Eskom monopoly to come to end, and a true competitive environment will finally emerge.

Yours faithfully,
David Lipschitz
​Portfolio Head of Energy on the Greater Cape Town Civic Alliance (GCTCA) Exco.​