WHY MOSSRATES BELIEVES THIS ISSUE NOW REQUIRES URGENT CLARIFICATION
• a review and reduction of the charge to align with its original stated purpose.
• no 5.8% increase in 2026
Ratepayers understand that municipalities face financial pressure.
But transparency, lawful tariff structuring, and fair treatment of compliant households remain essential.
Public trust depends on openness.
Not opaque cost recovery mechanisms that ordinary residents increasingly struggle to interrogate or understand
And if it functions like a rate, should VAT be charged on it at all?
HOW THE FIXED POWER CHARGE WAS INTRODUCED
When the fixed electricity charge was introduced in 2023, the Municipality explained that the purpose of the charge existed primarily to recover the financial shortfall created by declining electricity sales, driven largely by reduced grid consumption, load shedding, and increased private solar adoption, while simultaneously continuing to fund the Municipality’s fixed electricity network and operational cost structures.
The Municipality then also stated that these fixed costs included:
• maintenance of infrastructure
• administration costs
• depreciation costs
• and operational costs associated with maintaining the electricity network.
THE IMPORTANT HISTORICAL QUESTION
However, an important question now arises.
Up to and including 2022, Mossel Bay Municipality historically financed electricity-related operational overheads largely through the surplus generated from electricity sales themselves.
In simple terms:
• electricity sales generated substantial surpluses
• those surpluses funded operational and infrastructure requirements
• and no separate large-scale residential fixed electricity levy existed in its current form.
The key structural change since then appears to be:
• increased private solar adoption
• and a decline in traditional electricity sales volumes.
That reality may justify some level of restructuring. But it does not automatically justify unlimited or opaque fixed-charge expansion.
Because if electricity surpluses historically already funded:
• maintenance
• administration
• depreciation
• network operations
• and broader electricity overheads, then ratepayers are entitled to ask an obvious question:
👉 if those costs were already being funded through electricity trading surpluses up until 2022, why are households now being asked to fund many of those same cost categories again through large fixed monthly charges?
This becomes especially important where the fixed charge increasingly appears to operate as a broad revenue-recovery mechanism rather than a narrowly defined infrastructure availability fee.
THE BULK POWER AGREEMENT QUESTION
A further important concern relates to the apparent inconsistency between ordinary residential consumers and large bulk electricity users.
It is understood that there are reportedly more than 50 bulk power supply agreements operating within Mossel Bay.
Many of these bulk users maintain substantial portions of their own internal electrical infrastructure networks.
This raises legitimate public-interest questions:
• what contribution do these bulk users make toward the municipality’s broader electricity infrastructure costs
• how are those contributions calculated
• are equivalent fixed infrastructure charges being recovered proportionately
• and why do ordinary residential users appear exposed to highly visible individual fixed monthly charges while many bulk structures operate differently?
Ratepayers are entitled to transparency regarding whether the fixed-cost burden is being allocated equitably across all electricity users.
THE SOLAR OFFSET QUESTION
An additional concern relates to the Municipality’s own renewable-energy generation.
The Hartenbos solar facility reportedly produces approximately R1 million worth of electricity value per month.
That potentially represents approximately R12 million per year in electricity value.
Yet many ratepayers cannot identify where this benefit is transparently reflected within the Municipality’s fixed-charge calculations or electricity pricing structure.
If municipal solar generation is reducing bulk electricity procurement costs, then ordinary consumers are entitled to ask:
• where is that financial benefit reflected
• how is it offset against electricity revenue requirements
• and why does there not appear to be a visible corresponding credit either:
• within electricity consumption pricing
• or within the fixed-charge allocation model?
These are reasonable public finance questions.
THE GROWING CONCERN
What now concerns many ratepayers is that subsequent municipal communications appear to broaden the purpose of the fixed charge beyond its originally stated intent.
The concern is no longer simply about maintaining electrical infrastructure.
The concern is whether the fixed charge is increasingly being used as a general revenue recovery mechanism for broader municipal financial pressures.
If so, ratepayers are entitled to ask:
• exactly what costs are being funded through this charge
• what portion relates to revenue losses caused by declining electricity sales
• what contribution bulk users make toward those same costs
• how municipal solar generation offsets these calculations
• and whether the charge is still being applied in line with its originally stated purpose.
To date, Mossel Bay Municipality has not clearly disclosed this breakdown in a manner easily understandable to ordinary ratepayers.
That lack of transparency creates concern around an increasingly opaque process.
IS THIS ACTUALLY A “RATE-LIKE” CHARGE?
This issue becomes even more important when VAT is considered.
A genuine electricity consumption charge is clearly linked to a taxable service supply, electricity consumed.
But a fixed compulsory levy imposed simply because a property is connected to the municipal network increasingly resembles a property-based availability or infrastructure charge.
In substance, many ratepayers now argue that this charge functions more like a municipal rate than a traditional service fee.
And if that is the case, serious questions arise regarding whether VAT should apply in the manner it currently does.
THE VAT QUESTION
MossRates believes this issue now requires urgent clarification.
Based on current charge structures, it appears that the manner in which the fixed electricity charge is classified potentially enables approximately R27 million per year in VAT-related taxation flows on Mossel Bay households and businesses.
That is a very significant financial burden on compliant ratepayers.
Especially when:
• the exact cost build-up remains unclear
• no fully transparent reconciliation has been publicly provided
• no clear bulk-user contribution reconciliation has been disclosed
• municipal solar offsets are not visibly reflected
• and the Municipality has still not supplied a current 2025 Cost of Supply (COS) study for proper public scrutiny.
Without a current COS study, ratepayers cannot properly assess:
• whether the fixed charge remains justified
• whether cross-subsidisation is occurring
• whether electricity users are carrying unrelated municipal cost burdens
• whether bulk users contribute proportionately
• whether municipal renewable generation offsets are correctly applied
THE GROW AGENDA This leads to perhaps the most important question of all:
👉 are these massive fixed power charges really about ordinary maintenance, or are they increasingly funding Mossel Bay’s ongoing “GROW” development agenda — Metro number 9 to include George and Mossel Bay?
Ratepayers continue to see:
• major electrical upgrades
• expanding bulk infrastructure
• new substations and reinforcement projects
• and network expansion linked to future growth areas.
If much of this expenditure is growth-driven rather than ordinary maintenance, then existing compliant households should not quietly become the financial backstop for future development expansion.
The public increasingly wants the actual numbers.
Not broad explanations.
WHAT MOSSRATES IS CALLING FOR
MossRates is therefore calling for:
• publication of the 2025 complete Cost of Supply study
• clear separation between electricity infrastructure costs and broader municipal overhead allocations
• disclosure of bulk electricity contribution methodologies
• disclosure of how municipal own solar-generation benefits are allocated
• clarification regarding the VAT treatment of the charge – if its a rate then do not VAT it !
• independent assessment of whether the charge functions substantively as a rate-like levy
• full disclosure of what portion of fixed power charges relates to ordinary maintenance versus growth-driven infrastructure expansion and future development capacity.
• a review and reduction of the charge to align with its original stated purpose.
• no 5.8% increase in 2026
Ratepayers understand that municipalities face financial pressure.
But transparency, lawful tariff structuring, and fair treatment of compliant households remain essential.
Public trust depends on openness.
Not opaque cost recovery mechanisms that ordinary residents increasingly struggle to interrogate or understand
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