Electricity tariffs are complex instruments that supply authorities use to manage network behaviour. They are built from three core components: consumption (kWh), maximum demand (kVA) and service fees. Understanding these charges, particularly how your power factor affects kVA demand and how time-of-use rates lift peak costs, is vital for any South African business looking to control energy spend.
Consumption charges reflect the total energy used on site, measured in kilowatt-hours (kWh), and usually make up 50% to 100% of the bill. They can be billed several ways, often in combination: a flat rate per kWh; time-of-use, where the rate changes through the day (higher at peak, lower off-peak); or a stepped tariff, where the price changes as consumption crosses set thresholds. Power factor does not directly affect these charges.
Most commercial and industrial tariffs in South Africa use a time-of-use or maximum demand structure. The difference between peak and off-peak rates can exceed R2.00 per kWh in some regions. Without real-time metering to shift non-essential load out of peak windows, a business is guaranteed to pay more than it needs to.
As sites grow, suppliers add a maximum demand charge, measured in kVA, because they must maintain the capacity to supply your highest load at any moment, even if it occurs for a single 30-minute period a month. It is calculated on the highest kVA pulled in a short window, and against your Notified Maximum Demand (NMD), the capacity you agree not to exceed. The critical link: maximum demand in kVA is directly affected by your power factor, and a poor power factor inflates this charge, which can reach 45% of the total.
On top of consumption and demand, tariffs carry fixed service and administration fees, and penalties, most notably for a low power factor. Knowing which components dominate your bill is the first step to controlling it, and the reason measured, time-stamped data matters so much.
Three: consumption charges (kWh), maximum demand charges (kVA), and service or fixed fees. Larger sites also face time-of-use rates and penalties.
A charge for the capacity the supplier must keep available for your highest load, measured on the highest kVA pulled in a short window (typically 15 to 30 minutes) in the billing cycle. It can be up to 45% of the bill.
Time-of-use rates change through the day. In some South African regions the difference between peak and off-peak can be over R2.00 per kWh, so shifting non-essential load out of peak windows saves significantly.
It does not change consumption (kWh) charges, but it directly affects maximum demand (kVA). A poor power factor raises your kVA demand and inflates that part of the bill.