Major pain hitting South African households this week

South African households will be hit by significant rate hikes this week, with electricity prices leading the charge for the incoming pain.

Tuesday (1 July) marks the start of the municipal financial year in South Africa and will see local hikes to rates and taxes kick in.

Households in major metros across the country will see increases to monthly rates for electricity, water, sanitation, refuse removal and property rates.

Local councils have been debating and voting for increases as part of their budget process, and despite pushback and a few changes here and there, rate hikes are largely set.

South Africans can expect above-inflation hikes this year as cities continue to operate under strained conditions.

City of Joburg, for example, will be increasing its water and sanitation charge by 13.9% from Tuesday, which is even higher than the already-burdensome 12.7% increase to electricity charges.

Despite the steep increases, the city is still sitting with a maintenance backlog of over R200 billion, which remains unfunded, meaning the bill pain is unlikely to make a dent.

By contrast, the City of Cape Town has much lower rate hikes coming—but the burden of financing the budget will come at the cost of the wealthier and higher-income brackets.

The City of Tshwane’s budget included similar fee increase trends, with double-digit hikes for electricity and water.

However, the city’s budget also introduced a new R194 per month city cleaning charge, which will add even more pressure to households.

While other cities, like Cape Town, have city cleaning fees, these are attached to the value of the property. Tshwane’s will differ by charging a flat rate of R194 to any households that does not have a city waste account.

Also, contrasting other metros, Tshwane’s property rates should be declining by about 4% to account for the higher property valuations on the roll.

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

Electricity increases will be worse than you expect

Along with the electricity price hikes across the metros, households are likely to see their electricity bills come in much higher than the stated increases.

The announced electricity hikes are an average increase across all households. The increase reflected on individual bills will differ, depending on consumption.

This is because national power utility Eskom has implemented new fee structures under its retail tariff plan (RTP) that carry various capacity, network and service charges.

The RTP became partially effective (20%) on 1 April 2025, and will be full phased in by 2027/28.

Under the RTP, a final Eskom 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.

Because of this new structure, energy experts have warned that households could see their bills shoot up anywhere between 30% and 80%, if their consumption is typically low.

Once fully phased in, by 2027/28, the RTP will push bills far beyond the Nersa-approved three-year general hike of 26.1%.

An analysis done by independent analyst Pieter Jordaan shows that a middling Eskom direct consumer (using 600kWh per month) could see their bill rise by 30% in 2025 alone.

Eskom direct customers, who have been under the new structure since 1 April, have already reported seeing their electricity bills come in far higher than this rate.

The further two phases of 30% in 2026/27 and and 30% in 2027/28—plus the 5.36% and 6.19% general tariff increases granted for those years—will push electricity bills far higher.

Once the full RTP changes kick in over the next three years, price hikes will average over 75% versus the 2024/25 rates, he said.

This is something municipal customers will also have to bear in mind as their municipalities are Eskom customers themselves, and will likely pass on any additional costs to households.