Why Does the Price of Electricity Change? Understanding Electricity Tariffs in South Africa

If you have noticed that the price of electricity seems to increase every year, you are not alone. Whether you buy prepaid electricity or receive a monthly municipal account, changes to electricity tariffs can have a noticeable impact on your household budget.

However, electricity prices do not increase for just one reason. The cost of generating and distributing electricity, infrastructure maintenance, municipal operating expenses and regulatory decisions all influence what consumers pay.

The way electricity is priced also matters. Some tariffs charge a flat rate per unit, while others increase the price as your consumption rises or charge different rates depending on the time of day.

Understanding how electricity tariffs work can help you make sense of price increases, compare your electricity costs and manage your consumption more effectively.

In this guide, we explain who determines electricity prices in South Africa, why tariffs change and how different pricing structures affect your electricity bill.

Who Determines the Price of Electricity in South Africa?

Electricity pricing in South Africa involves several organisations. Understanding their different responsibilities helps explain why the price you pay may differ from the price another household pays.

The role of Eskom

Eskom generates and supplies most of South Africa’s electricity. It sells electricity directly to certain customers, including households and businesses, and supplies electricity in bulk to municipalities.

Eskom’s tariffs cover the costs associated with generating, transmitting and distributing electricity, as well as maintaining the infrastructure needed to supply customers.

Eskom submits tariff applications and pricing proposals to the National Energy Regulator of South Africa (NERSA). Once approved, the applicable tariffs are published and implemented according to the relevant dates and conditions.

The role of NERSA

The National Energy Regulator of South Africa (NERSA) is responsible for regulating the electricity supply industry.

Its responsibilities include evaluating electricity tariff applications, approving applicable tariffs and overseeing pricing frameworks.

This means electricity suppliers cannot simply introduce any price increase they choose. Their tariff applications are subject to regulatory processes and approval.

The role of municipalities

Many South African households do not receive electricity directly from Eskom. Instead, their local municipality purchases electricity in bulk and distributes it to residents and businesses.

Municipalities are responsible for operating and maintaining their local electricity distribution networks. They also have to recover the costs associated with providing the service.

Municipalities therefore publish their own customer tariffs, taking into account their costs, approved pricing arrangements and applicable regulatory requirements.

This is one of the reasons electricity prices can differ between cities and towns.

Why Do Electricity Tariffs Increase Every Year?

Electricity tariffs are reviewed periodically, and consumers often experience annual price adjustments.

There are several factors that can contribute to these increases.

1. The cost of generating electricity

Generating electricity involves significant operating expenses.

These include the costs of fuel, maintenance, labour and operating power stations. Eskom’s generation fleet includes coal-fired power stations, as well as other generation technologies, each with its own operating and maintenance requirements.

When the cost of producing electricity increases, it can place pressure on the overall cost of supplying electricity.

2. Maintaining and upgrading infrastructure

Electricity must travel from power stations through transmission networks and local distribution infrastructure before reaching homes and businesses.

This infrastructure requires ongoing maintenance and investment.

Ageing equipment, damaged infrastructure, network expansion and the need to improve reliability can all contribute to electricity supply costs.

These expenses may ultimately be reflected in the tariffs charged to customers.

3. Transmission and distribution costs

The cost of electricity is not limited to generating it.

Electricity suppliers and distributors must maintain the networks that transport electricity over long distances and deliver it to individual properties.

These costs include maintaining substations, transformers, cables, overhead power lines and other network infrastructure.

For municipalities, local distribution costs can be an important part of the overall cost of providing electricity.

4. Inflation and operating expenses

Electricity suppliers and municipalities are also affected by broader economic conditions.

The costs of equipment, construction, maintenance, labour and other operational requirements can increase over time.

Tariff adjustments may take these expenses into account, alongside the costs of purchasing electricity and maintaining the supply network.

5. The financial sustainability of electricity supply

Electricity suppliers need sufficient revenue to operate, maintain and invest in their infrastructure.

NERSA considers the financial requirements of electricity suppliers when evaluating tariff applications, while also taking affordability and the interests of consumers into account.

The challenge is balancing the need for a reliable and financially sustainable electricity supply with the financial pressure that higher tariffs place on households and businesses.

A South African example: The 2026/27 tariff adjustments

The 2026/27 financial year provides a useful example of how electricity tariff adjustments are implemented.

Following NERSA’s approval, Eskom’s average standard tariff adjustment for direct customers was 8.76%, effective from 1 April 2026.

Municipal bulk electricity tariffs were adjusted by an average of 9.01%, effective from 1 July 2026.

These percentages are average adjustments, not a guarantee that every household’s electricity rate increased by exactly the same amount. Individual tariffs can be affected by changes to tariff components, consumption categories and fixed charges.

It is also important to understand that Eskom’s bulk electricity price adjustment and the final residential tariff charged by a municipality are not necessarily identical.

Why Do Electricity Prices Differ Between Municipalities?

A household in Cape Town may pay a different electricity rate from a household in Johannesburg, Tshwane or another municipality.

Even where municipalities purchase electricity from the same supplier, their customer tariffs can differ.

There are several reasons for this.

Different electricity distribution networks

Every municipality has its own electricity distribution infrastructure to operate and maintain.

The size, age, condition and complexity of these networks can influence the cost of supplying electricity to local customers.

Different operating costs

Municipalities have different operating expenses and electricity distribution requirements.

Factors such as maintenance, staffing, infrastructure investment and the number and location of customers can affect the cost of providing electricity.

Different tariff structures

Municipalities do not necessarily use identical residential tariff structures.

One municipality may have several residential categories, while another may use different consumption blocks or fixed monthly charges.

This means two households with similar electricity consumption could pay different amounts because they fall under different tariff structures.

Different approaches to fixed charges

Some municipalities recover a portion of their electricity distribution costs through fixed monthly or daily charges.

Others may structure their tariffs differently, recovering more of their costs through consumption-based charges.

As a result, comparing only the advertised price per kWh may not provide an accurate comparison of the total cost of electricity.

How Do Different Electricity Tariff Structures Work?

The structure of your electricity tariff determines how the cost of electricity is calculated.

Although the exact options depend on your electricity supplier and property, three common pricing structures are flat-rate, inclining block and time-of-use tariffs.

Flat-rate electricity tariffs

A flat-rate tariff charges the same energy price for every kWh consumed, regardless of how much electricity you use.

For example, if your tariff charges R3.00 per kWh, every unit of electricity is charged at that rate.

This type of tariff is relatively straightforward to understand because the energy rate remains the same as consumption increases.

However, fixed monthly charges or other fees may still apply.

Inclining block electricity tariffs

An inclining block tariff divides electricity consumption into different usage levels, with the price per unit increasing as consumption rises.

For example, a hypothetical tariff could look like this:

These figures are illustrative only and do not represent an actual electricity tariff.

Under this structure, a household using 500 kWh would pay:

• First 100 kWh at R2.50 = R250.
• Next 300 kWh at R3.00 = R900.
• Remaining 100 kWh at R3.50 = R350.

The total energy charge would be R1,500.

The important point is that the household does not pay the highest rate for every unit. Each portion of consumption is charged at the rate applicable to its block.

This type of tariff can make electricity more expensive for households with higher consumption.

It is also one reason why purchasing the same amount of prepaid electricity may sometimes provide fewer units than expected.

Time-of-use electricity tariffs

Time-of-use tariffs charge different rates depending on when electricity is consumed.

Instead of applying one price throughout the day, the supplier divides the day into different periods.

These commonly include:

• Peak: Periods when electricity demand is high, and prices are generally higher.
• Standard: Periods with moderate demand and intermediate pricing.
• Off-peak: Periods when electricity demand is lower, and prices are generally lower.

The exact times and rates depend on the applicable tariff and may also change between seasons.

Time-of-use tariffs are designed to encourage consumers to shift flexible electricity usage away from periods of high demand.

For example, a household might be able to reduce its electricity costs by running certain appliances during off-peak periods rather than during peak hours.

However, these tariffs generally require suitable metering infrastructure and are only available to customers who meet the supplier’s requirements.

Comparing the three tariff structures

Understanding which tariff applies to your property is important because it can influence the most effective way to manage your electricity costs.

What Are Fixed Electricity Charges and Why Do You Pay Them?

When looking at an electricity account, you may notice charges that remain payable regardless of how much electricity you consume.

These are generally referred to as fixed charges.

They are used to recover certain costs associated with providing and maintaining the electricity supply.

Depending on your tariff, these may include:

Service charges

A service charge is a fixed amount associated with providing electricity services to a property.

It may be charged monthly or according to another billing arrangement.

Network or distribution charges

These charges help recover the costs of operating and maintaining the electricity distribution network.

The exact way these costs are recovered depends on the tariff.

Capacity charges

Some tariffs include a charge based on the capacity made available to a customer or the electricity demand placed on the network.

These charges are more common in certain larger or more specialised electricity tariffs, although some residential arrangements may also include capacity-related components.

Administration and meter-related charges

Certain tariffs include administration, service or meter-related charges.

These may be fixed amounts rather than charges based directly on the number of units consumed.

Why fixed charges matter

Fixed charges can make a significant difference when comparing electricity tariffs.

For example, one tariff may have a relatively low energy rate but a higher monthly service charge. Another may have a higher energy rate but a lower fixed charge.

A household with low consumption might therefore find that the tariff with the lower advertised price per kWh is not necessarily the cheapest overall.

This is why it is important to compare the total cost of electricity rather than looking at the energy rate alone.

Why Does the Same Amount of Prepaid Electricity Buy Fewer Units?

One of the most common frustrations experienced by prepaid electricity customers is discovering that the same rand amount no longer buys as many units as it used to.

For example, you may previously have received 100 kWh for R300, but now the same purchase amount provides fewer units.

There are several possible explanations.

Annual tariff increases

If your electricity supplier increases its tariffs, the cost per unit may also increase.

This means that the same amount of money will purchase fewer units, even if your household’s electricity consumption has not changed.

Moving into a higher consumption block

If your tariff uses inclining block rates, the price per unit may increase as your monthly consumption rises.

Depending on how the tariff is structured, this can affect the number of units you receive when purchasing additional electricity.

Fixed or daily charges

Some prepaid electricity arrangements include fixed or daily charges that may be recovered through the vending process.

Where these apply, a portion of your purchase may go towards charges rather than being converted directly into electricity units.

Changes to your tariff category

Your applicable tariff may change because of a municipal tariff adjustment, a change in your property’s classification or another change to the electricity supply arrangement.

If the tariff changes, the number of units received for the same purchase amount may also change.

How to check what is happening

If your prepaid electricity seems to be running out faster or your purchases are providing fewer units, start by checking:

1. How many kWh you received from your latest purchase.
2. Whether your electricity tariff has changed.
3. Whether your tariff uses consumption blocks.
4. Whether any fixed or daily charges apply.
5. Whether your actual electricity consumption has increased.

Fewer units do not automatically mean that your prepaid meter is faulty.

For more help identifying the possible causes, read our guide on why prepaid electricity may be running out so quickly.

Can You Choose a Different Electricity Tariff?

Some electricity suppliers and municipalities offer different tariff options, but not every household can freely choose between them.

Your available options may depend on your property, meter, electricity supplier and the conditions attached to each tariff.

For example, a municipality may offer different residential categories based on property classification, consumption levels or eligibility for subsidised electricity.

Some suppliers also offer time-of-use tariffs for customers with suitable metering infrastructure.

Before considering a tariff change, check the following:

• Which residential tariffs are available to your property?
• Are you eligible for the tariff you want?
• Does it require a different meter?
• Are there additional fixed or service charges?
• Will the tariff be more economical for your typical consumption?
• Are there application or installation costs?

A tariff with a lower energy rate is not automatically the cheapest option. You should compare the complete pricing structure, including fixed charges and any conditions that apply.

If you are unsure which tariff applies to your property, contact your municipality or electricity supplier for clarification.

How to Understand the Electricity Tariff on Your Bill

Understanding your electricity account is one of the easiest ways to identify changes in your electricity costs.

Whether you receive a municipal account or buy prepaid electricity, there are several details worth checking.

1. Check your tariff category

Your account should identify the tariff or customer category that applies to your property.

This is important because different categories can have different energy rates and charges.

2. Check the price per kWh

Look for the energy rate charged for each unit of electricity.

If your tariff uses consumption blocks, there may be more than one rate.

3. Look for fixed charges

Check whether your account includes service, network, capacity or administration charges.

These costs may apply even when your electricity consumption is low.

4. Check the billing period

Make sure you understand the period covered by the account.

A change in tariffs during a billing period may result in different rates being applied to different portions of your consumption, depending on the supplier’s billing rules.

5. Compare your latest account with the previous one

Look at both the kWh consumed and the total amount charged.

If the amount has increased, ask yourself:

• Did I use more electricity?
• Did the energy rate increase?
• Did I move into a higher consumption block?
• Have any fixed charges changed?
• Has my tariff category changed?

Separating changes in consumption from changes in pricing makes it much easier to understand why your electricity costs have increased.

How Can You Manage Electricity Costs When Tariffs Increase?

You cannot always control the price charged by your electricity supplier, but you can take steps to manage your electricity consumption and avoid unnecessary expenses.

Monitor your electricity usage

Keep track of how many units your household uses each day or month.

Monitoring actual kWh consumption is more useful than looking only at how much money you spend on electricity.

Understand your tariff structure

If you are on an inclining block tariff, understanding the consumption thresholds can help you see how additional usage affects your costs.

If you have a time-of-use tariff, consider whether flexible activities can be moved to cheaper periods.

Identify high-consumption appliances

Geysers, electric heaters, air conditioners, pool pumps and tumble dryers can all contribute significantly to electricity consumption.

Understanding how much electricity these appliances use can help you identify opportunities to reduce unnecessary usage.

Avoid wasting electricity

Switching off unnecessary appliances, improving geyser efficiency and using heating and cooling equipment sensibly can help reduce consumption.

Small changes can make a difference when they are applied consistently.

Review your electricity account regularly

Check your tariff, fixed charges and consumption trends periodically.

If something changes unexpectedly, contact your supplier or municipality rather than assuming that the increase is simply due to higher usage.

How JKNV Energy Helps Property Owners Manage Electricity Costs

Understanding electricity tariffs is particularly important when managing properties with multiple tenants, apartments, offices or other separate units.

For landlords and property managers, electricity costs can create administrative challenges. Shared electricity supplies, unclear consumption allocations and disputes over utility expenses can make it difficult to recover costs fairly.

Prepaid electricity metering and sub-metering can help property owners measure electricity consumption at individual units and allocate costs more accurately.

With suitable metering and utility management solutions, property owners can:

• Monitor electricity consumption across multiple units.
• Improve transparency around electricity usage.
• Allocate electricity costs more accurately.
• Reduce disputes between landlords and tenants.
• Improve the management of shared electricity supplies.
• Recover utility costs more efficiently.

JKNV Energy provides prepaid metering and utility management solutions for landlords, property managers, sectional-title developments, student accommodation and commercial properties.

Whether you manage a single rental property or a larger multi-unit development, the right metering arrangement can make electricity management more transparent and straightforward.

Final Thoughts

Electricity prices in South Africa change because of a combination of generation, infrastructure, distribution and operating costs, as well as regulatory decisions and municipal pricing structures.

However, the tariff structure is just as important as the headline price increase.

Flat-rate, inclining block and time-of-use tariffs all calculate electricity costs differently. Fixed charges can also influence the total amount you pay, even when your consumption remains relatively low.

By understanding your tariff, checking your electricity account and monitoring your actual consumption, you can make better decisions about managing your electricity costs.

For property owners and managers, suitable prepaid metering and utility management solutions can also help improve consumption monitoring, cost allocation and utility recovery.