Comprehensive Analysis of Small Business Electricity Tariffs in South Africa: 2025/2026 Fiscal Year
The 2025/2026 fiscal year marks a watershed moment in South African energy regulation, shifting from volume-based models to unbundled, cost-reflective pricing. With NERSA-approved increases of 12.7% for Eskom direct and 15.7% for municipal bulk, small businesses face a weighted average rate of 241.2c/kWh (Excl. VAT). Navigating this new landscape requires strategic energy management to mitigate rising fixed capacity charges.
The Shift to Unbundled Pricing
The architecture of South African electricity pricing is dictated by the Multi-Year Price Determination (MYPD). For the 2025/2026 financial year, the regulatory environment is moving toward a "user-pays" principle. This structural overhaul introduces the Generation Capacity Charge (GCC), designed to recover the fixed costs of maintaining the national grid and backup power.
For Small Power Users (SPU), your bill is increasingly split into three distinct components:
Active Energy Charge
The variable cost for units consumed (c/kWh).
Service and Administration Charge
A fixed daily/monthly fee for billing and metering.
Network Capacity Charge
A charge based on your connection size (kVA or Amperes).
This restructuring means that even a significant reduction in energy usage (kWh) may result in a much smaller decrease in your total bill, as fixed components remain static.
Regional Rate Breakdown: Metros vs. Eskom
Small businesses within municipal boundaries are subject to local markups. For 2025/2026, the weighted average rate for a business in a municipal area is significantly higher than the national Eskom baseline of 181.74c/kWh.
| Provider / Region | Energy Rate (c/kWh Excl. VAT) | Standard Fixed Charge (Monthly) |
|---|---|---|
| City of Johannesburg | 224.5c | ~R1,130 |
| City of Cape Town (SPU 2) | 212.8c | ~R2,100 (incl. VAT) |
| City of Ekurhuleni | 268.4c | R545 (Single Phase) |
| eThekwini (Durban) | 258.1c | R580 |
While Cape Town offers lower energy rates for high-volume users, micro-businesses on "Ultra-Low" tariffs face rates as high as 355c/kWh, making them some of the most expensive in the country.
Localized E-E-A-T Fact
Following a December 2025 High Court judgment, NERSA was forced to redetermine Eskom's allowable revenue due to previous calculation errors. This has resulted in an additional R24 billion to be recovered. For small businesses in South Africa, this means that while the 2025/2026 increase is locked at 12.7%, the projected increases for 2026/2027 and beyond have been revised upward, with compound costs expected to rise by over 35% in the next 24 months.
The "Solar Tax" and the Strategy of High Fixed Charges
The rise of rooftop solar among SMEs has triggered a defensive regulatory response. To combat "grid defection" and protect municipal revenue, utilities are shifting recovery toward high fixed charges.
Fixed Overhead
In Johannesburg, network capacity charges increased by 15.7% to decouple profit from actual energy volume.
Feed-In Limitations
While municipalities like Cape Town and Ekurhuleni offer feed-in credits, the rates are often a fraction of the import cost. For example, Ekurhuleni offers a credit of only 88.4c, while businesses import at over 260c.
To remain viable, small businesses must adopt Load Shifting to utilize Off-Peak periods and invest in Power Factor Correction to reduce the kVA-based demand charges that are seeing the sharpest increases.
Key Takeaways
The 2025/2026 fiscal year shifts SA electricity pricing from volume-based to unbundled, cost-reflective models
Small businesses face a weighted average rate of 241.2c/kWh (Excl. VAT) with significant regional variation
Fixed capacity charges are rising sharply, reducing the bill impact of energy savings alone
Compound costs are projected to rise by over 35% in the next 24 months following the High Court judgment
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