South Africans have until Sunday 20 September to comment on draft electricity pricing rules that would unbundle bills and make time-of-use charging mandatory within five years.
The Department of Electricity and Energy published the Draft Revised Electricity Pricing Policy on Friday 28 August following cabinet approval. It replaces the 2008 framework, written before the major expansion of private sector participation in electricity generation and the growth of rooftop solar.
The policy aligns with the Electricity Regulation Amendment Act signed by President Cyril Ramaphosa in August 2024, which creates the legal framework for competitive electricity markets.
How bills would change
All electricity tariffs would become cost-reflective within five years, meaning charges would reflect the actual cost of generating and delivering power, rather than averaged or subsidised rates.
Bills would show separate charges for:
- generation (producing the electricity);
- transmission (moving it long distances on high-voltage lines);
- distribution (delivering it to homes or businesses);
- retail services (meter reading, billing, customer service);
- any subsidies received or contributed to.
Currently, generation, transmission and distribution costs are bundled together in energy charges.
Time-of-use pricing would become mandatory for medium-voltage customers, typically businesses and large users, within two years. Three-phase customers and those with meters that support it would follow within five years. Time-of-use pricing charges different rates depending on when electricity is used, with higher rates during peak hours like evenings and lower rates at night.
Protections for low-income households
Despite these changes, low-income households would continue to receive support. The lifeline tariff, a subsidised electricity rate for poor households, would increase its capacity limit from 20 amps to 60 amps.
Free Basic Electricity would continue but with stricter rules. Qualifying low-income households would still receive a monthly allocation of free electricity, typically 50 kWh per month. However, they would lose this benefit while disconnected for meter tampering or non-payment until lawfully reconnected.
The policy would require a two-year review to assess whether Free Basic Electricity is reaching intended beneficiaries.
Rules for solar and alternative suppliers
The policy would establish rules for wheeling. Wheeling customers buy electricity from a supplier other than their local municipality or Eskom but still use the local distributor’s power lines to deliver it.
All wheeling customers would pay:
- distribution charges (using local power lines);
- transmission charges (using the national grid);
- retail charges (administration and customer service);
- their share of cross-subsidies (contributions that fund support for poor households).
Customers with rooftop solar would be required to use time-of-use tariffs and pay network charges for power they both consume and export to the grid. They would receive credits based on what it would have cost the utility to buy that power elsewhere, but these credits could not be offset against network or retail charges.
Cross-subsidies apply to all
Regardless of how customers buy electricity, cross-subsidies, where some customers pay more to help others pay less, would be required to be transparent and itemised on bills.
The policy states that all network-connected customers would be required to contribute proportionately to approved cross-subsidies. Wheeling customers and those with embedded generation could not avoid these contributions.
The National Energy Regulator of South Africa (NERSA) would be required to develop a national subsidy framework within 12 months of the policy taking effect.
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Legal framework and penalties
The Electricity Regulation Amendment Act would require the establishment of the Transmission System Operator SOC Limited within five years. This new state-owned company would control the national electricity grid, a function currently performed by Eskom. The National Transmission Company South Africa would act as interim operator.
The act would establish market operator as a new licensed activity, where companies would be licensed to run trading platforms for buying and selling electricity. It would require development of a Market Code, the rulebook governing how competitive electricity trading would work.
Severe penalties for infrastructure damage would be introduced. Damaging cables or equipment would carry fines up to R1 million or five years imprisonment, or both. Receiving stolen infrastructure would carry fines up to R5 million or 10 years imprisonment, or both.
Once enacted, NERSA would have 12 months to develop national tariff frameworks, subsidy frameworks and use-of-system charge standards, which would be the rules for charging customers who use the transmission and distribution networks.
Public comment closes on Sunday 20 September. Submissions can be made:
- By post: Private Bag X96, Pretoria, 0001
- By hand: House 192 Visagie Street, Corner Paul Kruger Street, Pretoria
- By email: EPP.Comments@dee.gov.za
