How South Africa’s Electricity Pricing Changed, and What It Means for You
Eskom’s 2025/26 financial year tariff increases, as approved by NERSA (National Energy Regulator of South Africa)this April, may be at an average of 12.74%, but this figure barely scratches the surface. Behind that national average lies a sweeping overhaul in how electricity is priced for South African households, particularly with the abolition of Inclining Block Tariffs (IBTs) and the introduction of higher fixed monthly charges.
It is more than a price hike. It is a structural realignment that redistributes cost burdens in ways proving controversial, especially for low-income, low-consumption households.
Structural Shift: Out With IBTs, In With Flat Rates and Fixed Charges
Until now, Eskom’s residential tariffs used the Inclining Block Tariff structure, which charged lower rates for the first blocks of electricity consumed and progressively higher rates for greater usage. It was designed to incentivise conservation while offering affordable energy to low-usage households, many of whom are low-income.
In 2025/26, that model is no more for most tariffs. Eskom and NERSA argue that the IBT structure no longer accurately reflects the cost of supply. And that it disproportionately under-recovers revenue from wealthier households with solar who reduce their grid usage.
The new model introduces:
- Flat energy rates for most customers, regardless of usage volume.
- Massive increases in fixed monthly charges, notably an 88% jump for HomePower and HomeFlex tariffs.
This reallocation of cost recovery means that low-usage customers no longer benefit from cheaper blocks, while high-usage households escape the punitive upper-tier tariffs they once faced.
Real-World Impact: Usage, Tariff, and Timing Matter More Than Ever
A detailed analysis of the changes shows that the effects vary drastically based on tariff category and household consumption patterns. The results are frequently counterintuitive and deeply regressive in other cases.
1. HomeLight 28: Low-Income, Prepaid Users Lose Out
- Typical users: Lower-income households, prepaid meters, small capacity connections.
- <350 kWh/month: +13.57% increase, well above the national average.
- >350 kWh/month: Virtually flat at +0.2%.
Why? The bottom-tier subsidised block is gone, and FBE (Free Basic Electricity) remains limited to 50 kWh/month. However, many eligible households are not properly registered with municipalities and may not receive it.
It disproportionately penalises small households or energy-conscious users who previously stayed within the subsidised bands.
2. HomeLight 60A: Bigger Connections, Even Bigger Shocks
- Typical user: Still low-income but higher-capacity connection (60A).
- <600 kWh/month: Up +18.26%, the highest increase across all tiers.
- >650 kWh/month: Bills decreased compared to last year.
Low users here get hit even harder than those on HomeLight 28. Once again, removing IBT eliminates the cheap starter block. However, for high-usage households, the new flat rate is cheaper than the upper blocks under IBT, leading to an effective discount.
It is a design that rewards higher consumption and punishes efficiency, an outcome at odds with conservation goals.
3. HomePower 4: A Double Impact of Structural Changes
- Typical user: Middle- to high-income households with smart meters, often on credit.
- <750 kWh/month: Face the worst increases, far exceeding 12.74%.
- >1,100 kWh/month: See notable reductions in their electricity bills.
This tariff is where the biggest shift is. It combines two massive changes:
- The abolition of IBT, removing punitive upper tiers for high users.
- An 88% increase in fixed monthly charges, now over R218/month.
Low-usage households now pay a high fixed cost spread over a small volume of electricity, dramatically increasing their cost per kWh. In contrast, high users spread the same fixed charge over more units, lowering their effective cost. The result? Energy-conscious consumers are financially penalised.
4. HomeFlex 4: Smart Tariffs, Smarter Timing Required
- Typical user: Solar-equipped households, Time-of-Use (TOU) metering.
- Variable impact depends on time-of-day usage patterns.
Even households with smart TOU tariffs are not spared:
- Energy rates for peak, standard, and off-peak usage have all increased.
- The 88% fixed charge hike also applies here.
- Small reductions in demand and network charges have minimal mitigating effects.
Unless you have the flexibility and the technology to shift usage away from expensive peak hours, costs are up across the board.
Fairness and Affordability: A Growing Concern
The analysis shows that the highest percentage increases fall on the lowest consumers, those most likely to be poor.
“There is a growing perception that the tariff changes are anti-poor,” one source bluntly states.
This is not just about higher prices. It is about:
- Eliminating targeted subsidies (IBT) that helped low users.
- Replacing them with fixed charges that favour high-consumption households.
- Failing to ensure FBE access to all eligible households.
- Rewarding those with the financial and technological ability to shift or generate their power.
Meanwhile, those who use the least, either out of necessity or efficiency, are paying more per kWh than some of the country’s heaviest users.
Add Reliability Woes to the Mix
Eskom’s operational performance has not kept pace with its pricing ambition. The regulator’s benchmarks are not being met:
- Unplanned Capacity Loss Factor (UCLF): Target 20%, actual 33%
- Energy Availability Factor (EAF): Target 65%, actual closer to 55%
This means that even as consumers pay more, they still endure unreliable supply and persistent loadshedding. The message to customers, pay more for less, fuels resentment and scepticism.
Legal Battles and Municipal Markups
The tariff changes have drawn legal scrutiny. The Democratic Alliance and the South African Local Government Association (SALGA) have challenged the decisions, questioning NERSA’s methods. But thus far, courts have upheld the regulator’s authority and process.
Meanwhile, the municipal layer adds another level of complexity and cost:
- Johannesburg’s City Power imposed a 16.74% increase in its service capacity charge.
- Municipal markups mean prepaid users in Joburg saw:
- +6.36% increase for low users
- +18.84% increase for high users on the municipal portion alone
These surcharges compound Eskom’s increases, making the final cost to consumers even more opaque and location-dependent.
Solar Looks More Attractive Than Ever
With grid costs rising, loadshedding ongoing, and the financial burden shifting toward the consumer, many households are asking a new question:
How can I take back control?
For those with means, solar photovoltaic (PV) systems, battery storage, and energy management tools offer cost certainty, grid independence, and long-term savings.
This latest tariff shake-up may unintentionally accelerate South Africa’s solar transition, particularly for affluent, tech-savvy households. But for the poor, the irony is bitter: they remain tethered to a grid that charges more for using less, with little recourse.
A New Electricity Pricing Era
Eskom’s 2025/26 tariffs are not just price adjustments; they represent a philosophical shift in how electricity is funded. From variable, usage-based pricing to flat rates and high fixed charges, this move has reallocated cost burdens in ways that reward volume and penalise restraint.
- For high-consumption households? Relief.
- For low-usage, cost-conscious households? Punishment.
- For those without access to solar or storage? Trapped.
The result is a deeply uneven energy economy where affordability and fairness are increasingly in question.
As pricing changes to reflect Eskom’s cost structure, the real question becomes:
Can households afford to wait for the grid to catch up, or is it time to go off-grid altogether?
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Disclaimer: The information provided in this article is intended for educational and informational purposes only. Every effort has been made to ensure accuracy. However, we advise that readers consult datasheets and installation manuals to verify information. For specific project requirements or additional guidance, please contact the Get Off Grid technical team.
