By Dirk Groenewald – Director MidCity Utilities (Pty) Ltd

Every year, shortly after the yearly tariff increases have been implemented by Eskom or local Municipalities, we all face the dreaded increase in risk deposit requirements from service providers.

(Eskom, local municipalities, utilities service providers, rental responsibility, and other service providers.)

Risk deposit increases are not just connected to the yearly tariff increases but 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, reviewing and upholding of the risk deposit requirements.

1. Tariffs:
   • Eskom tariff increases take effect on the 1^st of April of every year.
   • Local municipalities tariff increases take effect on the 1^st 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 City of Johannesburg, the same applies.

The basics on residential households, in the City of Tshwane Metropolitan Municipality, as per the bylaws on risk deposits are as follow:

• Minimum amount as a risk deposit for a new single phase postpaid electricity consumer with postpaid water services, is R1 630,05.
•  The amount comprises an electricity deposit of R1 037,05 plus a water deposit of R593,00.
• The initial minimum risk deposit will be used for any new or temporary connection.
• Once the 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 guideline.
• With 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 (consumption) to calculate what the risk deposit should be, also considering the tariff increase, consumption, and any fixed charges.
• The calculated requirement is measured against the risk deposit already on the consumers account and an adjustment is made should the risk deposit requirement be higher than what is held currently.

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 is an industry norm.
• Post-paid utilities accounts are received by the client, after service or product was 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 considered too high, check for water leaks, and fix it 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 requirement can be used for your account payment or refunded.

Can my risk deposit be used against my current account?

• If the client is not vacating the premises, the risk deposit cannot be used to settle a current or arrear account.
• All MidCity Utilities Accounts are due and payable on the 4^th of every month.
• After monthly statements have been issued, on or about the 22^nd of every month, we send out sms notices.
• Reminders of accounts due are also sent out on month end.
• Clients who have not made payment on the 5^th of the month, are reminded again, before the credit control collection process and costs start.

Is my risk deposit refundable?

• Yes, it is.
• When a consumer vacates a 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 done.