The City of Johannesburg and City Power will ring-fence electricity revenue from 1 October 2026. The Organisation Undoing Tax Abuse (OUTA) welcomed the decision.
Under the plan, 70% of the electricity payments the city collects for the utility will go to City Power within 48 hours, OUTA said. The city will keep the other 30%.
“For years, residents have paid increasingly expensive electricity bills while watching parts of the electricity network deteriorate around them,” said Julius Kleynhans, executive manager at OUTA.
Kleynhans said part of the problem was that the city used electricity revenue to pay many other kinds of expenses. He said this meant electricity services were not properly funded.
OUTA said nothing should change for ratepayers. “They will continue receiving the same municipal statement and using the same account numbers, payment references and approved City payment channels,” the organisation said.
According to OUTA, the only change is what happens to the money after residents pay their bills to the city.
“The new arrangement should give City Power greater certainty about the revenue available to run the electricity service, including paying Eskom and suppliers,” OUTA said.
If the plan works, City Power should have more money to repair and maintain infrastructure. It should also be able to buy new equipment and improve the network.
“Put simply, if you pay for electricity, you should be able to see that enough of that money is going back into sustaining the electricity service,” Kleynhans said.
He said City Power should use residents’ payments to cut technical and non-technical losses. He said it should also invest in a network that has been under severe strain.
“If properly managed, this should help City Power plan better, reduce disruptions and, over time, help relieve some of the financial pressure contributing to repeated electricity increases,” said Kleynhans.
OUTA also raised questions about the 30% the city will keep. It said the metro should explain what the money is for and how the percentage was decided.
The organisation said the city must also show what systems will be in place to account for that money.
“City Power and the City should show us what was collected, what was transferred, what the City retained, what was lost through theft and non-payment,” said Kleynhans.
OUTA said the same rule should apply to other municipal services, including water, sanitation and refuse removal. It said there should be a clear, public link between what residents pay and what services cost.
City Power has been stuck in a debt spiral since 2007. This is because Eskom tariffs have become more and more unaffordable, adding to other pressures on the utility.
The utility also loses money through non-technical losses. Energy expert Chris Yelland explained in January what these losses include.
“Electricity consumed but unpaid due to payment default, illegal connections, meter bypassing, billing failures and fraud,” Yelland said.
Rising debt, infrastructure vandalism and non-payment by some residents have left City Power’s grid severely constrained.
OUTA said the ring-fencing will not solve Johannesburg’s wider money and governance problems. “The city’s leadership must still tackle waste, corruption, weak controls and poor performance throughout the administration,” Kleynhans said.
Source: this article is based on reporting by MyBroadband. Image: MyBroadband. Written with the help of AI and published by the Tzaneen Voice News desk. See our Editorial Standards.
Kgomotso Maake covers news and politics for Tzaneen Voice. Kgomotso reports on government, Parliament, municipalities, courts, crime and service delivery across South Africa, with a close eye on how national decisions reach towns like Tzaneen and the wider Limpopo province. Stories are written in plain English and focus on the facts: who made the decision, what it means, and what happens next.