SA small business electricity tariffs, 2025/26
The 2025/26 fiscal year is a watershed for South African energy pricing, shifting from volume-based models to unbundled, cost-reflective tariffs. With NERSA-approved increases of 12.7% for Eskom direct and 15.7% for municipal bulk, small businesses face a much higher weighted-average rate. Navigating the new landscape, especially rising fixed capacity charges, takes strategic energy management.
- 2025/26 shifts from volume-based pricing to unbundled, cost-reflective tariffs.
- Bills split into an active energy charge, a fixed service charge and a network capacity charge.
- Because fixed components stay static, cutting kWh no longer cuts the bill proportionally.
- Municipal rates vary widely; some ultra-low micro-business tariffs reach 355c/kWh.
The shift to unbundled pricing
South African pricing is set by the Multi-Year Price Determination, and for 2025/26 it is moving to a "user-pays" principle. The overhaul introduces the Generation Capacity Charge to recover the fixed costs of the grid and backup power. For small power users, the bill increasingly splits into three parts:
- Active energy charge: the variable cost per unit consumed (c/kWh).
- Service and administration charge: a fixed daily or monthly fee for billing and metering.
- Network capacity charge: a charge based on your connection size (kVA or amperes).
Because the fixed components stay static, even a significant cut in kWh may produce a much smaller drop in the total bill.
Regional variation: metros vs Eskom
Small businesses inside municipal boundaries face local markups. Against an Eskom baseline of about 181.74c/kWh, weighted-average municipal rates are notably higher and vary sharply by metro. While some regions offer lower rates for high-volume users, micro-businesses on ultra-low tariffs can pay as much as 355c/kWh, among the most expensive in the country.
Following a December 2025 High Court judgment, NERSA had to redetermine Eskom's allowable revenue after calculation errors, adding billions to be recovered. For small businesses, that means more pressure on rates and a greater need to be on the right tariff and to verify every bill.
What changed for small businesses in 2025/26?
The move to unbundled, cost-reflective pricing under the Multi-Year Price Determination. Bills now split into an active energy charge (c/kWh), a fixed service and administration charge, and a network capacity charge based on your connection size.
Why doesn't cutting usage cut my bill much?
Because a growing share of the bill is fixed. When the service and network capacity charges are static, reducing kWh only reduces the variable portion, so the total falls by less than you might expect.
How much do municipal rates vary?
Widely. Against an Eskom baseline of about 181.74c/kWh, municipal weighted-average rates are higher, and micro-businesses on ultra-low tariffs can pay as much as 355c/kWh, among the most expensive in the country.
What should a small business do?
Understand which components dominate your bill, make sure you are on the right tariff for your usage profile, and verify every bill, since the new complexity raises the chance of errors.