South Africa is set to overhaul the way electricity prices are structured, with government saying the changes are aimed at making tariffs more transparent, improving affordability and supporting ongoing reforms in the electricity sector.
Electricity and Energy Minister Kgosientsho Ramokgopa outlined the proposed Revised Electricity Pricing Policy on Tuesday, 18 August 2026.
The policy will move electricity tariffs towards cost-reflective pricing over a five-year period, while maintaining protections for vulnerable households and supporting industries under financial pressure.
The revised policy is expected to be published for public comment on 21 August, with the public comment period running until 20 September.
The key changes at a glance
Five-year transition:
Electricity tariffs will gradually move towards reflecting the actual cost of supplying electricity, rather than making the full adjustment immediately.
More transparent electricity bills:
Bills will be required to provide a clearer breakdown of costs, including energy, network services and municipal surcharges.
Protection for poor households:
Free Basic Electricity and lifeline tariffs will remain. Government is also proposing to increase the Free Basic Electricity allocation for qualifying indigent households from the current 50kWh to between 200kWh and 300kWh per month.
Solar customers can earn credits:
Households and businesses with rooftop solar will be able to export surplus electricity to the grid and receive credits through net-billing arrangements.
Fairer municipal tariffs:
The policy seeks to address significant differences in electricity pricing between municipalities and customer categories.
NERSA remains the regulator:
The National Energy Regulator of South Africa will continue to oversee electricity pricing and approve tariff applications.
What does “cost-reflective” mean?
Cost-reflective tariffs are designed to more accurately reflect the actual cost of producing and delivering electricity.
This includes costs associated with generation, transmission, distribution and retail.
The five-year transition is intended to prevent consumers from facing the full impact of the change at once.
However, cost-reflective pricing does not necessarily mean electricity will become cheaper immediately. Instead, government says the new framework is intended to create a more sustainable and transparent pricing system over the longer term.
The announcement comes after electricity prices have increased substantially over the past two decades. Ramokgopa said tariffs have risen by about 977% since 2007.
What will happen to Free Basic Electricity?
One of the major changes proposed is an increase in the amount of Free Basic Electricity available to qualifying indigent households.
The current 50kWh monthly allocation could increase to between 200kWh and 300kWh.
Government says the policy will continue protecting low-income households as the country moves towards cost-reflective tariffs.
Electricity bills could become easier to understand
Under the proposed system, consumers should be able to see more clearly where their electricity money is going.
Instead of charges being presented as a largely consolidated amount, bills would distinguish between components such as:
- Energy and generation costs
- Transmission and distribution network charges
- Ancillary services
- Municipal surcharges
The aim is to prevent consumers from carrying costs that are not directly related to their electricity consumption.
Government also wants to address the practice of compliant electricity customers effectively carrying the cost of municipal electricity debt and non-payment.
What does this mean for households with solar?
The revised policy formally recognises the growing role of households and businesses that generate their own electricity.
Customers with rooftop solar will be able to export excess electricity to the grid and receive credits through net-billing arrangements.
The policy also proposes fair and transparent network charges for customers who use the electricity grid while buying power from alternative suppliers.
A 10-year electricity price forecast
Another significant proposal is for NERSA to publish a 10-year electricity price forecast.
Government says this would give households, municipalities and businesses greater certainty when planning their finances.
For energy-intensive industries, longer-term price visibility could also help companies determine whether major investments in South Africa are financially viable.
What about businesses and major industries?
The revised policy also makes provision for negotiated electricity pricing agreements aimed at supporting strategically important industries facing financial pressure.
Government has been engaging with energy-intensive companies, including major industrial and mining operations, over arrangements that could help protect jobs and prevent the closure of strategically important facilities.
Why is government changing the policy?
South Africa’s existing Electricity Pricing Policy dates back to 2008.
The electricity sector has changed significantly since then, including the unbundling of Eskom, the growing participation of independent power producers and reforms aimed at creating a more competitive electricity market.
The new policy is intended to bring electricity pricing in line with these changes and provide a common framework for Eskom, municipalities, NERSA, independent generators, traders and other electricity market participants.
What happens next?
The revised policy is not yet final.
It is due to be published for public comment on 21 August 2026. Members of the public, businesses and other stakeholders will then have an opportunity to submit their views before the policy is finalised.
The important point for consumers: the revised policy is a framework for changing how electricity is priced. It does not represent an immediate nationwide electricity price increase. Existing tariff increases for 2026/27 remain subject to the separate regulatory decisions already made by NERSA.
