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Why the requirement for risk deposits, and what are the fundamentals?

By Dirk Groenewald – Director, MidCity Utilities (Pty) Ltd

Every year, following the annual Eskom and local municipality increases, many consumers face the reality of higher utility risk deposits as service providers adjust these amounts accordingly.

(Service providers refer to: Eskom, local municipalities, utility service providers, rental responsibility holders, and other service providers.)

Risk deposit increases are not only implemented according to annual tariff increases; they are also linked to a consumer’s monthly usage or monthly account, with fixed charges as per the relevant local municipality.

Registered utilities service providers abide by the municipal bylaws for the implementation, review, and upholding of the risk deposit requirements:

  1. Tariffs:
    • Eskom tariff increases take effect on the 1st of April of every year.
    • Local municipalities’ tariff increases take effect on the 1st of July of every year (electricity, water, sanitation, rates and taxes).
  2. Consumers’ monthly account:
    • Consumers determine their own usage of electricity and water (sanitation is linked to water usage).
    • Electricity and water tariffs are structured in such a manner that the more electricity or water is used in a month, the higher the tariff and the cost payable.
  3. Fixed charges:
    • Certain charges are raised monthly by municipalities whether electricity or water is used or not.
    • In Tshwane, monthly fixed charges are raised on household water and sanitation, apart from consumption charges.
    • In the City of Johannesburg, the same applies.

The basic rules for residential households, in the City of Tshwane Metropolitan Municipality, as per the bylaws on risk deposits are as follows:

  • The minimum amount as a risk deposit for a new single-phase postpaid electricity consumer with postpaid water services is R1 893,22.
  • This amount comprises an electricity deposit of R1 245,22, plus a water deposit of R648,00. 
  • The initial minimum risk deposit will be used for any new or temporary connection.
  • Once three-month consumption figures are available, the deposit will be adjusted to twice the value of the average monthly electrical and water consumption.
  • No deposit for electrical power consumption is payable by consumers who are supplied by means of prepaid electrical metering.

How does MidCity Utilities calculate the risk deposit increase or requirement on residential consumers?

  • We use the municipal bylaws as a guideline.
  • For new clients, we apply the minimum prescribed risk deposit requirements.
  • The risk deposit of new clients is reviewed after completion of a three-month billing period.
  • The risk deposit to be held should be equal to at least two months’ consumption.
  • For clients who have been with MidCity Utilities for longer than six months, we use historic account information to calculate what the risk deposit should be, taking into consideration the tariff increase, consumption, and any fixed charges.
  • The calculated requirement is compared to the existing risk deposit on the consumer’s account and is increased should the requirement be higher than the current amount.

Why the need for risk deposits?

  • As with renting a property, buying a car, or placing an order for a product or service, deposits are required to ensure service or receipt of a product.
  • Risk deposit requirements are an industry norm.
  • Post-paid utility accounts are received by the client after the service or product has been provided; thus, the client already had the benefit of the service.
  • Risk deposits safeguard the client and the service provider, mitigating risk and responsibility for possible payment of a final account.

How can I reduce the risk deposit requirement?

  • Reduce monthly consumption of electricity and water.
  • Check your water usage and, if it is considered too high, check for water leaks to fix them as soon as possible.
  • Change over to prepaid electricity.
  • After changing to prepaid electricity, request a review of the risk deposit requirement.
  • The reduction in the risk deposit amount can be applied to your outstanding account or refunded.

Can my risk deposit be applied to my current account?

  • If the client is not vacating the premises, the risk deposit cannot be used to settle a current or arrears account.
  • All MidCity Utilities accounts are due and payable on the 4th of the following month.
  • After monthly statements have been issued, around the 22nd of every month, SMS notices are sent out.
  • Reminders of due accounts are sent out at month-end.
  • Clients who have not made payment by the 5th of the month are reminded before the credit control collection process begins and costs are incurred.

Is my risk deposit refundable?

  • Yes, it is.
  • When a consumer vacates the premises, they must inform the utilities service provider and complete a “Discontinuation of Services” form.
  • The risk deposit will be transferred to the consumer’s final account.
  • The risk deposit will be offset against the final account, and if a refund is due, it will be paid out within 14 to 21 days after the final account has been issued.
  • Consumers must ensure that all supporting documentation is submitted for a refund to be processed.

More Articles

1. How can I purchase prepaid electricity?

By making use of one of the following:

  • MidCity Utilities app
  • MidCity Utilities website
  • Internet banking
  • Unipin vouchers

Unipin vouchers can be purchased at registered retailers, garages and other suppliers.

  • When providing your prepaid meter number to the cashier, the prepaid purchase will transfer over to the meter automatically.

  • If you do not provide your meter number to the cashier and you receive the voucher slip, you must follow the steps as set out thereon.

  • Make sure you are using the correct meter number.
  • After registering with MidCity Utilities for prepaid electricity, our customer care personnel will SMS you your meter number.

  • When you register for the mobile app or on our website, you will also be able to see your meter number.

  • Clients who also request to receive monthly statements, even though they are on prepaid, will be able to see their meter number on their monthly statement.

  • Contact our customer care personnel.
  • Log in to either our mobile app or website.

  • SMS the word “Balance” (space) “meter number” to 37823. You will receive an SMS with your meter balance and predicted zero balance date.

  • Use your keypad, if you have one.
  • Yes. A low balance notification will be sent to the registered cell phone number that is loaded onto our system.

  • The low balance notification will be sent 48 hours before the calculated depletion date.

  • The depletion date received on the low balance notification, mobile app or website is an estimate and depends on the client’s consumption habits and changes.

Mobile app or website

  • The final step in the process on the mobile app or website will indicate if the transaction was successful.
  • Transfer of credits to the meter can take approximately 10 minutes after the purchase is completed successfully.
  • On the mobile app, website or SMS balance enquiry, it can take 30 – 60 minutes to update the effective current balance from a successful purchase.

Internet banking

  • Confirmation of the transaction will be provided by your bank.
  • You will receive an SMS or email with the value of the token, as well as the 20-digit code already loaded on your meter.
  • Purchases on internet banking can take approximately 30 minutes to transfer to the meter.
  • On the mobile app, website or SMS balance enquiry, it can take 30 – 60 minutes to update the effective current balance from a successful purchase.

Unipin voucher

  • After following the process reflected on the voucher with your cell phone, you will receive confirmation and notification on your device.
  • Purchases through Unipin vouchers can take approximately 30 minutes to transfer to the meter.
  • On the mobile app, website or SMS balance enquiry, it can take 30 – 60 minutes to update the effective current balance from a successful purchase.
  • Contact our customer care personnel for assistance on 071 687 0113 or 082 404 8954

  • Email us: CustomerCare@mcu.energy

  • It remains the responsibility of each resident to ensure that their personal and contact details are kept up to date

You can access your account and copies of all previous statements, invoices and account trends by following a few easy steps: click here.