Tariffs & billing
How electricity tariffs work in South Africa
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.
- Tariffs have three core parts: consumption (kWh), maximum demand (kVA) and service fees.
- Consumption is often billed on time-of-use, where peak rates can be over R2/kWh higher than off-peak.
- Maximum demand is charged on your highest brief kVA in the month, and can be up to 45% of the bill.
- Power factor directly affects kVA demand, so a poor power factor inflates that charge.
Consumption charges: the energy you use
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.
Maximum demand: the capacity you require
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.
The reverse catches sites out too. When a site shrinks, much of that capacity cost stays until the tariff changes: PepsiCo's Continental Beverages site in Bloemfontein saves about R60,000 a month after changing tariff.
Service fees and penalties
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.
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PepsiCo's Continental Beverages site moved off a demand-based Centlec tariff.
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Explore ›Questions
What are the main parts of an electricity tariff?
Three: consumption charges (kWh), maximum demand charges (kVA), and service or fixed fees. Larger sites also face time-of-use rates and penalties.
What is a maximum demand charge?
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.
How does time-of-use affect cost?
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.
Does power factor affect my bill?
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.
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