summary

All generation, transmission, distribution, and retail tariffs must become fully cost-reflective within five years. Licensees must submit Cost of Supply (CoS) and Cost to Serve (CTS) studies to NERSA at least every five years based on standardised regulatory accounts.

Blended, single-rate tariffs are scrapped. Invoices must transparently itemise wholesale energy purchases (variable energy + generation capacity + balancing), transmission network charges, distribution use-of-system (DUoS), customer service charges (R/point of delivery/month), administrative fees, municipal surcharges, and explicit subsidy contributions.

To eliminate volume risk for distributors and prevent “free-riding,” fixed infrastructure costs will no longer be recovered through variable kilowatt-hour ($c/kWh$) charges. Utilities must introduce separate fixed capacity charges ($R/kVA$, $R/kW$, or $R/Amp/month$). Additionally, a wholesale generation standby capacity charge ($R/kW$) will be levied across all customer classes to fund backup generation reserves.

Grid-tied consumers with embedded generation (rooftop solar) face a stringent net-billing structure:

1. 1. Mandatory Time-of-Use (TOU) tariffs.
   2. Prosumers must pay standard DUoS and TUoS network charges on both consumed electricity and exported energy.
   3. Exported energy will be credited at “avoided purchase cost” on a TOU basis, but network, transmission, and retail charges cannot be offset or credited against energy exports.
   4. Extra retail administration fees will be billed to handle net-billing accounts.

Inclining Block Rate (IBR) tariffs are eliminated for standard residential consumers. Domestic supply is divided into:

1. 1. Lifeline Tariffs: Single energy rate with zero fixed charge, limited to 60 Amps for indigent households.
   2. Standard Domestic: Unbundled charges featuring an itemised monthly network capacity charge, customer service charge, and energy rate.
   3. Three-Phase Domestic: Mandatory TOU energy rates and capacity charges.

Transmission network costs will no longer be recovered solely from load customers. Costs will be split 50/50 between generators and consumers using a zonal pricing methodology, preventing local consumers from subsidising cross-border electricity exports under Southern African Power Pool (SAPP) trading.

Unregulated, hidden municipal electricity “surpluses” used to fund municipal budgets are prohibited. Base electricity tariffs will be strictly regulated by NERSA to cost of supply. Any municipal surcharge must be transparent, itemised, and regulated by National Treasury under the Municipal Fiscal Powers and Functions Act. No new MSOE can be introduced alongside existing hidden surpluses.

NERSA must establish empirical benchmarks for technical losses, non-technical losses (theft), and bad debt. Any municipal or Eskom losses and uncollected debts exceeding these regulatory thresholds must be excised from the allowed revenue base and cannot be passed on to paying consumers.

NERSA is mandated to establish a binding pricing framework within 12 months capping service fees and commissions charged by third-party prepaid vending platforms to protect consumers from excessive markups.

Cross-subsidies must be transparent and capped (e.g., maximum 10% contribution threshold). While the policy formalises Free Basic Electricity (FBE) funded via the national budget/equitable share, Minister Ramokgopa’s push to lift FBE from 50 kWh to 200–300 kWh per month raises critical tariff questions. Negotiated Pricing Agreements (NPAs) offering discounted industrial rates (such as 62 c/kWh for ferrochrome smelters) will be expanded beyond distressed entities to strategic growth sectors, with shortfalls strictly managed to avoid distorting general tariffs.

Currently, most residential consumers pay a single, blended rate per kilowatt-hour (c/kWh) that rolls generation, transmission, local cables, and municipal administration into one charge. Under EPP 2026, your bill will be separated into explicit line items: actual energy consumed, a fixed monthly capacity charge for the wires (R/kVA or R/Amp), a customer service and meter reading fee, an itemised municipal surcharge, and an explicit subsidy line item.

The policy explicitly targets solar owners under Policy Position 33. Because you draw less energy from the grid while still relying on it at night, utilities lose volumetric revenue. EPP 2026 introduces mandatory fixed monthly capacity charges that you must pay regardless of how little power you pull. If you export power back to the grid, you will receive a credit at “avoided cost,” but you will also be charged network fees on your exported electricity, and your export credits cannot be used to offset your fixed monthly charges.

The draft policy states that FBE must be funded through government equitable share allocations and the national budget. However, the Minister announced plans to raise the allocation from 50 kWh to between 200 kWh and 300 kWh per month without increasing the national R21 billion funding envelope. Energy experts caution that if National Treasury does not bridge this multibillion-rand gap, utilities will recover the deficit by raising tariffs on paying domestic and business consumers.

No. Policy Position 47 outlaws the practice of using hidden, non-transparent electricity surpluses to fund other municipal operations. Base electricity tariffs must strictly reflect the cost of supply approved by NERSA. Any municipal surcharge (MSOE) must be transparent, itemised on the bill, and approved under National Treasury regulations.

Policy Positions 42 and 43 introduce an essential ratepayer protection: NERSA must establish binding benchmarks for non-technical losses (electricity theft/illegal connections) and bad debt. Any losses or unpaid debt exceeding these limits cannot be factored into allowable revenue or passed on to consumers through tariff hikes.

Policy Position 45 instructs NERSA to develop a national standardised pricing framework for prepaid electricity vendors within 12 months, setting maximum allowable service fees and commissions to eliminate predatory markups.