Cash & Liquidity
Cost-Coverage Ratios
Service revenue measured against the cost of providing each service.
Why Cost Coverage Tests Service Viability
Trading services such as water, electricity and refuse are meant to be self-funding, and the ratio of service revenue to the cost of providing each service shows whether that principle holds. Persistent under-recovery, especially on bulk-purchased services, drains the entity and is a core input to both the tariff-setting process and the AGSA's revenue-management and going-concern work. AuditPro Core measures service revenue against the cost of providing each service so cross-subsidisation and unsustainable tariffs are exposed.
The Numbers
AuditPro Core renders this view from your tenant's live, tamper-evident records. The figures below are illustrative sample data.
Blended Coverage
94%
▼ 3 pts YoY
Water Coverage
71%
loss making
Electricity Coverage
108%
surplus
Bulk Losses
R 142 m
distribution losses
Revenue vs Cost by Service (R m)
Coverage by Service
| Service | Revenue (R m) | Cost (R m) | Coverage % |
|---|---|---|---|
| Electricity | 1042 | 965 | 108% |
| Water | 384 | 541 | 71% |
| Refuse | 178 | 196 | 91% |
| Sanitation | 154 | 168 | 92% |
Figures shown are illustrative sample data for demonstration. AuditPro Core renders these views from your own tenant's live, tamper-evident records.
Cost-reflective tariffs
A tariff should at least recover the full cost of delivering the service, including bulk purchases, distribution losses and overheads. A coverage ratio below one means the tariff is not cost-reflective and the service is being subsidised.
Distribution losses
Water and electricity lost to leaks, theft and metering errors are bought but never billed. High losses crush cost coverage even where the headline tariff looks adequate.
Cross-subsidisation
Surpluses on one service often fund deficits on another. Measuring coverage per service makes hidden cross-subsidies explicit so council can decide on them deliberately.
How AuditPro Core Bridges the Gap
- Reconciliation: service revenue is matched to the directly attributable cost of each service, producing a defensible coverage ratio per service.
- Continuous monitoring: coverage is tracked through the year so deteriorating services, often driven by rising bulk costs, are caught early.
- Exception workflow: services whose coverage falls below target are flagged for tariff review or loss-reduction action.
- Audit-ready export: the cost-coverage analysis exports to support tariff motivations and revenue-adequacy disclosures.
Key Takeaways
- A coverage ratio below one means the tariff is not cost-reflective.
- Distribution losses can sink coverage even with an adequate headline tariff.
- Per-service measurement exposes hidden cross-subsidies for council to address.
- Cost coverage feeds tariff setting and the going-concern picture.
See This on Your Own Data
AuditPro Core renders this dashboard from your tenant's live, tamper-evident records — every figure traceable to source.