Johannesburg is in talks with government to try to ensure that it does not lose its revenue from electricity when the new regional electricity distributors (REDS) come into effect.

Speaking to investors and representatives from rating agencies, Parks Tau, mayoral committee member in charge of finance and economic development, said yesterday that the city had approached national government to ask that it retain the power to cut off electricity supply to defaulters.

“Part of our responsibility as the city’s finance department is to collect revenue and the easiest way to get it from defaulters is to switch off their power. We need to keep electricity as a tool to ensure payment.  “We are talking to national government to ensure the long-term sustainability of our revenue stream.”

In Gauteng, Johannesburg derives 24,8% of its revenue from electricity, Ekurhuleni 33% and Tshwane 29%, which is the largest chunk of its income.

Concern over a loss of revenue for municipalities has been raised frequently, especially since electricity contributed more than 22% of total budgeted revenue for local governments across the country during the 2004-05 financial year.

According to EDI Holdings, which is managing the implementation of the REDS, as the system now stands billing and collection would become the responsibility of the new REDS, but municipalities as shareholders would receive revenue, depending on the size of the assets and the revenue they had contributed. The municipalities would retain the responsibility of ensuring that the residents received electricity.

Tau said that Johannesburg, in a bid to improve revenue collection, would also roll out a new revenue management system which would be live from September next year.

“The delay is to accommodate the new property rates system,” said Tau.  “From 2008 to 2009 the city would be levying rates in terms of the new Property Rates Act, which introduces complexities of its own and requires extensive public participation.”

The first draft is expected to be presented for public comment in the next two months.

Tau said the city believed it would be able to mitigate the rate increases to ensure that ratepayers were not affected.