South African electricity consumers face a fresh wave of tariff increases from 1 July 2026, after the National Energy Regulator of South Africa (NERSA) approved an average 9.01% hike for the country’s 176 licensed municipal and private electricity distributors.
The adjustment follows NERSA’s March 2026 approval of an 8.76% increase for direct Eskom customers — which took effect on 1 April — and forms the second phase of the regulator’s tariff reset for the 2026/27 financial year.
The increases are not uniform. Cape Town’s residents face the lowest approved hike in the country at 7.5%, while Buffalo City (East London) carries the steepest at 14%.
For the majority of South Africans who buy electricity via municipalities rather than directly from Eskom, 1 July is the date that will shape household and business budgets for the next 12 months.
| KEY TARIFF FACTS — 2026/27 • Eskom direct customers: 8.76% increase, effective 1 April 2026 to 31 March 2027 • Municipal customers: 9.01% national average, effective 1 July 2026 to 30 June 2027 • 176 licensed municipal and private distributors affected • Projected compound increase over two financial years (2026/27 + 2027/28): over 18% • Next year’s approved increase (2027/28): 8.83% |
Why the Approved Increase Is Higher Than Originally Planned
The 9.01% municipal increase is significantly steeper than the 5.36% originally projected under NERSA’s Sixth Multi-Year Price Determination (MYPD6).
The difference stems from a court-ordered process to correct a material error in how NERSA calculated Eskom’s Regulated Asset Base (RAB).
In late 2025, a South African High Court rejected a closed-door settlement between NERSA and Eskom that would have allowed the utility to recover an additional R54.7 billion through tariff hikes, ruling that the public must be consulted.
During that process, NERSA’s own consultation paper revealed a further recalculation, placing the figure closer to R76 billion — comprising approximately R62 billion in depreciation shortfalls and R14 billion in return on assets that had been incorrectly calculated in earlier determinations.
NERSA’s final decision settled on recovering R12 billion of that shortfall through tariffs in the 2026/27 financial year alone, with recovery spread across the remaining MYPD6 period.
It is this additional burden, layered on top of the original MYPD6 schedule, that pushed the 2026/27 increase from the expected 5.36% to 8.76% for Eskom direct customers and 9.01% for municipal distributors.
“It is concerning that after 15 years of price determinations, the regulator and the utility are still in dispute over fundamental accounting principles like asset depreciation.”
— Matthew Cruise, energy expert, IMPOWER Solar
Cruise warned that the continuous escalation risks further straining the national economy, adding that the regulator appears to struggle with its core mandate of ensuring electricity remains affordable while holding Eskom accountable for cost management.
A major underlying driver of the escalation remains the construction cost overruns at the Medupi and Kusile coal-fired power stations, whose financing costs continue to be passed through to consumers.
Metro-by-Metro Breakdown: What Your Municipality Will Charge
While NERSA sets the wholesale tariff framework, individual municipalities apply to the regulator for their own approved increases, which may be higher or lower than the national average depending on their cost-of-supply studies and operational circumstances. Below is the approved increase for major metros.
| Municipality | Approved Increase | Notes |
| City of Cape Town | 7.5% | Lowest increase nationally |
| City of Johannesburg (City Power) | 8.63% | Mid-range |
| City of Tshwane | 8.7% | Mid-range |
| Mangaung (Bloemfontein) | 9.01% | National average |
| Nelson Mandela Bay | 9.5% | Above average |
| eThekwini (Durban) | 10.09% | Upper range |
| Ekurhuleni | 12.7% | High — tariff legality contested |
| Buffalo City (East London) | 14.0% | Highest nationally approved |
Source: NERSA approvals; Briefly.co.za; The Citizen, June 2026.
Roughly two-thirds of South Africans purchase electricity through municipalities rather than directly from Eskom, making the 1 July adjustment the point at which the majority of the country will feel the real economic impact of the 2026/27 tariff cycle.
Ekurhuleni and Buffalo City: Legal Challenges Ahead
Ekurhuleni’s 12.7% approved increase has attracted significant legal and regulatory scrutiny.
An industrial cluster represented by RSA Clusters has alleged that the metro’s 2026/27 tariff application contains material errors, including a substantially understated tariff revenue figure that artificially inflated the gap requiring recovery.
The cluster’s managing director, Steve Jardine, and its attorney, MC Botha of TRM Tax Attorneys, raised these concerns at a NERSA public hearing.
According to the cluster’s calculations, industrial tariff increases proposed by Ekurhuleni at 19.1% should in fact be no higher than 8.6%, with one specific sub-category potentially warranting a reduction.
Botha has called on NERSA to approach the courts to have its Ekurhuleni determination set aside and a lawful tariff established, though the regulator cannot unilaterally reverse an approved decision.
“Any electricity increase above CPI is simply unacceptable. Households and businesses are already under immense financial pressure.”
— Action SA Councillor Alice Govender, eThekwini
Buffalo City, carrying the steepest nationally approved increase at 14%, has itself flagged severe fiscal constraints to National Treasury.
The municipality and Nelson Mandela Bay have both indicated they have no financial cushion remaining, raising concerns about their ability to maintain indigent support programmes under these tariff conditions.
Economic and Social Impact
Energy and infrastructure consultant Ruse Moleshe, managing director of advisory firm RUBK, said the increase adds to over a decade of sustained electricity price escalation that has eroded household affordability and raised industrial input costs across the board.
Professor Vally Padayachee, an energy expert and former Eskom generation executive, noted that the industrial sector will face heightened operational costs likely to be passed through to consumers in the form of higher goods prices.
Smaller commercial firms with less flexibility risk the greatest competitive impact. Padayachee further warned that the tariff cycle risks intensifying energy poverty and grid reliability pressures, and could increase the likelihood of illegal electricity access in vulnerable communities.
For lower-income households, the concern extends beyond monthly electricity bills.
Cape Town’s electricity directorate has calculated that because the city’s indigent support revenue grows at only 6%, a full pass-through of the tariff increase would create a deficit in funding the city’s subsidy programme for 391,000 eligible households by 2027 without additional national grants.
| ESKOM OPERATIONAL CONTEXT
Despite the tariff pressure, Eskom has reported improved generation performance. The Energy Availability Factor (EAF) rose to 65.85% year-to-date for the period 1 April 2025 to 12 March 2026, with the fleet reaching or exceeding 70% on 83 separate occasions. Baseload units have stabilised materially, moving from approximately 9% availability two years ago to over 98% availability today. The utility has committed to transparent financial management and continued operational improvements. |
Looking Ahead: 2027/28 and the MYPD6 Trajectory
NERSA has simultaneously approved an 8.83% increase for the 2027/28 financial year, meaning consumers face a compound tariff escalation of over 18% across the two-year period.
This is against a backdrop of average annual increases approaching 15% over the past five years, and a cumulative residential tariff increase in excess of 180% between 2014 and 2024 for typical Eskom customers.
The Municipal Finance Management Act (MFMA) requires municipalities to implement tariff changes at the start of their financial year — 1 July — which is why the wholesale and retail tariff cycles are split between April (Eskom direct) and July (municipal).
For the 2026/27 cycle, the legal and regulatory calendar was significantly disrupted by the High Court-ordered public consultation on the RAB redetermination, compressing application and approval timelines.
Energy pricing experts continue to flag structural weaknesses in NERSA’s verification process.
Deon Conradie, a former senior Eskom tariffs manager and pricing expert, has publicly stated that NERSA does not appear to have sufficient resources to thoroughly verify the quality of tariff applications before they are published for public comment, a gap that allowed flawed applications to reach the approval stage in several municipalities.
What Businesses and Households Should Do Now
With the 1 July implementation date now days away, energy advisors recommend the following steps for both residential and commercial electricity users:
- Review your municipality’s approved tariff schedule on NERSA’s website (nersa.org.za) to understand your specific increase — it may differ significantly from the 9.01% national average.
- Assess whether you are on the optimal tariff structure. Eskom introduced structural tariff changes in April 2025 including a single flat residential c/kWh rate (replacing the tiered Homelight structure) and new Homeflex rooftop solar export credits.
- Industrial and commercial users should review whether their municipality’s approved cost-of-supply study has been independently verified, particularly in metros such as Ekurhuleni where applications are under active legal challenge.
- Consider on-site generation options. Solar payback periods continue to shorten as grid tariffs rise. A system that recovers its cost in seven years under today’s tariffs would have taken nine years three years ago.
- Indigent households in qualifying municipalities should confirm registration for Free Basic Electricity (FBE), which provides a subsidised consumption allocation and insulates qualifying consumers from some of the tariff impact.
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