Major pain about to hit South African households

Households across the country need to brace for significant electricity price hikes to hit from 1 July, as municipalities prepare to implement above-inflation tariff increases.

National energy regulator Nersa received applications for tariff hikes from 130 municipalities in May, which it is currently processing for implementation from 1 July.

Nersa approved the Eskom Retail Tariffs and Structural Adjustment (ERTSA) for 2025 in March, including the 12.74% increase for Eskom direct customers.

The regulator also approved the municipal tariff increase, which will see prices for municipal customers increase by at least 11.32% from 1 July 2025.

The Nersa-approved municipal rate sets the goalpost for increases at municipalities across South Africa, but the final rates can vary once city and municipal councils factor in their own budgetary needs.

This requires that each municipal distributor apply for their respective tariff hikes with Nersa, including the justifications for any deviations.

While most municipalities will keep their increases in line with Eskom’s rate, some regions, such as the City of Cape Town, may apply for higher rates or even lower.

However, it must be noted that the approved increases reflect an average increase across all packages, and individual bills may come in higher or lower, depending on energy consumption.

This was a rude awakening for some Eskom direct customers, who have been left shocked by the price escalation since April.

Multiple readers have submitted their electricity bills to BusinessTech, showing increases far above the 12.7% approved by Eskom.

In some cases, charges shot up by 88%, with most others coming in around 30% higher than before.

According to Eskom, the 12.7% increase is not a single increase implemented on all customers but rather the average across all Eskom residential tariffs.

It said that the average does not reflect the specific changes to each individual component of the tariff, which may vary depending on the tariff category and the characteristics of supply.

Notably, the final bill is influenced by various charges and fees:

• Energy Charge (c/kWh): Based on the actual energy consumed at the Point of Delivery (POD).
• Generation Capacity Charge (R/POD/day): A fixed daily charge based on the Notified Maximum Demand (NMD), covering the cost of maintaining generation infrastructure.
• Network Capacity Charge (R/POD/day): A fixed daily charge also based on the NMD, for maintaining the distribution network.
• Network Demand Charge (c/kWh): A variable charge based on energy usage, contributing to network operation costs.
• Ancillary Service Charge (c/kWh): Covers essential services to maintain grid stability and reliability.
• Service and Administration Charge (R/day): A daily fixed charge for services such as meter reading, billing, and infrastructure maintenance, applicable regardless of usage.

“These components are adjusted individually, and their combined effect may result in a higher overall increase than the average 12.74%, depending on your specific usage and tariff structure,” Eskom said.

Various energy experts flagged this and analysts ahead of the price increases, who stressed that the new pricing structures allowed by Nersa, including new capacity and service charges, would result in higher bills.

Tariff hikes for Cape Town, Joburg and Durban

Electric tariff increases are just one of several rates and taxes that will be shooting up this year.

South Africa’s biggest metros have been facing an uphill battle with residents over the 2025 rate and tax increases, each facing massive pushback.

The City of Joburg recently tabled its revised budget, which aims to pull the country’s economic hub from collapse. However, to achieve this, it needs to lean heavily on residents to pay the way.

Opposition parties have rejected the city’s budget, but there have also been murmurings of discontent from within the city’s coalition, particularly over fixed prepaid electricity charges that were supposed to be reviewed.

Similar platitudes of rebuilding were given with eThekwini’s budget. The city has been hit hard by several natural disasters and emergencies, which have left residents without basic services in many areas.

After initially tabling a budget that would hit residents with many double-digit rate hikes, the metro, like Joburg, had to come back with reduced rates.

But Joburg and Durban are not alone with public backlash.

The City of Cape Town, which has comparatively low rate hikes coming for its residents, has also faced furious pushback from residents over its plans.

It, too, had to table a revised budget to introduce many relief measures to try and douse the anger.

Despite the cities’ attempts to bring calm and understanding around their finances, households that have been under persistent pressure over the past few years and have run out of rope are not biting.

While some budgets face internal pressure from opposition parties in council or even within their own coalitions, some may face legal challenges from civil action groups.

The table below outlines the rate hikes tabled for the major metros.