The National Energy Regulator of South Africa (NERSA) has approved large municipal electricity tariff increases across 66 municipalities – set to come into effect on 1 July 2024.
This follows extensive Special Regulator Executive Committee meetings that were held throughout the past week to approve municipal tariff applications.
While NERSA announced on Friday, 28 June that it had completed considering the tariff applications of all 178 municipal and private distributors, a ruling from the Gauteng High Court on the same day interdicted numerous municipalities from implementing tariff hikes.
As a result, only 66 municipalities are allowed to implement the tariff increases, with the remainder given 60 days to submit compliant Cost of Supply studies to NERSA in order to get electricity prices approved for the 2024/25 financial year.
While the tariff hikes have been approved on a per-municipality basis, the majority of them are all significantly above the current inflation rate of 5.2% – with certain municipalities being granted nearly triple this percentage.
Cost-of-supply approach
This is a disappointing result, as many had hoped that NERSA’s new method of approving municipal electricity tariff increases would result in lower hikes moving forward.
The new method was implemented following the Pretoria High Court’s determination in October 2022 that the previous approach – which used price bands and guidelines – was illegal.
Under the new methodology, NERSA requires municipalities to submit comprehensive cost-of-supply studies that outline their projected costs over the next year.
This data is then used by the municipality to justify its requested tariff increase and by NERSA to determine if the request is reasonable.
It was hoped these comprehensive cost-of-supply calculations would uncover that municipalities could deliver electricity to their residents without requiring the usual high tariff increases.
This was not the case, and in several situations, municipalities ended up requesting larger tariff increases than before the new method was introduced
The latest municipal electricity tariff increases for South Africa’s largest metros are detailed below.
| Metropolitan municipality | Cost of supply indicated increase | NERSA approved average increase for 2024/25 |
|---|---|---|
| Buffalo City | 16.9% | 11% |
| City of Cape Town | 11.78% | 11.78%* |
| City of Ekurhuleni | 12.72% | 11.2% |
| City Power (Johannesburg) | 21% | 12.72% |
| City of Tshwane | 12.7% | 12% |
| Ethekwini | 18.7% | 12.72% |
| Nelson Mandela Bay | 13.04% | 13.04% |
* City of Cape Town actual tariff will be 7.2% as the municipality previously charged a higher base than NERSA had approved.
The solution is solar
These electricity tariff increases emphasise the value of installing a full solar system or completing a geyser conversion for your home.
Full home solar systems are the best solution as they can completely remove your reliance on the electricity grid.
Home solar systems are up to 30% cheaper than they were a year ago, too, and LookSee offers a low-interest rate Solar Loan product that makes them even more affordable.
When you own your home solar system, every time electricity tariffs rise, your monthly electricity savings rise by the same amount.
This makes buying and installing a solar system a must-do for South African home owners.
Solar geyser conversions are another great choice, as electric geysers contribute 40-50% of the average home’s electricity bill.
Converting your electric geyser to solar involves installing standard solar panels and linking them to a controller.
This controller converts solar energy into electricity that can power your existing electric geyser’s element and thermostat – meaning no geyser replacement or additional plumbing is required.
You can take out a Solar Loan for this, too, and the amount you save on your electricity bill is typically higher than your repayment cost – making you money from day one.
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