A newly released comparison of proposed municipal electricity tariff increases for 2010/11 shows that business and industrial consumers in the Ekurhuleni metropolitan area of Gauteng province will be confronted with a 57% surge in prices when compared with 2009/10 tariffs, while the average proposed increase across 11 large municipal areas surveyed would be 22%.

The study, which was prepared by utility pricing company NUS Consulting South Africa, was based on the "highest voltage maximum demand" tariffs available to clients requiring electrical capacity of 1,5 MVA over a 12-month period. Customers falling into this bracket would include large manufacturing companies, or enterprises such as large bakeries or paint producers, or even large commercial or retail complexes.

GM Stephan Dolk said that the comparison was based on the proposed increases submitted for approval by the municipalities to the National Energy Regulator of South Africa (Nersa) and were, in the main, at the upper end of Nersa's recommended increase range.

The analysis found that Ekurhuleni's tariffs in this category would increase by 28c/kWh to 77c/kWh, making industrial tariffs in the metropolitan area second highest after those charged in Johannesburg, where 80c/kWh was proposed for 2010/11.

Durban's proposed increase came in next highest at 30%, which would raise tariffs to the category of consumers surveyed to 71c/kWh and make that city's tariffs the third highest among the councils surveyed. Johannesburg's City Power, meanwhile, proposed a hike of 28% for the second year in succession.

NUS Consulting indicated that Richards Bay's proposed increase of 12% would be lowest of those surveyed and would sustain its position as the council charging the lowest tariffs to business customers, at 44c/kWh - only slightly more expensive than the 41c/kWh charged by Eskom to direct business customers. However, Dolk noted that there were discrepancies within the Richards Bay tariff structure that it had been unable to clarify ahead of publication.

NUS Consulting had previously recommended that municipal tariff increases should be kept to a level at least 5% below Eskom's increases, or at 28,9% as from July 1, 2010 - the difference between the 25% granted and the 28,9% figure quoted arises owing to the fact that the municipalities will apply the increases for nine months, from July 1, 2010 to March 31, 2011, while direct Eskom customers began paying the higher tariff from April 1, 2010.

Nersa granted Eskom average tariff increases of 25% for the three-year period from April 1, 2010, to March 31, 2013, with business and industrial tariffs to rise ahead of that average in order to protect households, especially poor households.

"Many municipalities have played ball in a very difficult environment by applying for quite moderate electricity price increases," Dolk said, adding that he hoped that Nersa would be able to intervene in those instances where the increases were excessive.

On June 2 and June 3, Nersa held hearings at which 19 municipalities' applying for above-guideline increases motivated for the deviation.

The guideline was for increases of 22% in the 2010/11 financial year for those municipalities that implemented a 25% increase in the 2009/10 financial year; 19% for those that implemented a 34% increase in the 2009/10 financial year; and a proportional percentage increase for municipalities that implemented an increase between 25% and 34%, or below 25%.

Municipalities raised various reasons for their above-guideline proposals including the need for increased maintenance and repairs, capital expenditure, and to enable them to fill staff vacancies, especially for scarce technical skills.

Nersa said that, while it recognised the different cost structures for different municipalities, it would not want to see a vast difference in the tariffs structures and levels.