Tariffs Are Up In The Air

While some municipalities have published their new electricity tariffs, many are still stalling. Businesses across South Africa are stuck in limbo, trying to plan around figures that haven’t been finalised. Unfortunately, this kind of uncertainty is nothing new. But it still creates risk.

The good news is you don’t have to wait for clarity before taking action. There are steps you can take now to reduce your exposure, regardless of what your municipality eventually decides.

What’s Going On With Municipal Electricity Tariffs?

The new tariff period officially started on 1 July. But at the time of writing, most municipalities still haven’t published final figures. Some, like City Power and eThekwini, have circulated draft documents or partial increases, but even those carry disclaimers about pending approval.

Cape Town remains the exception. Their updated tariffs went live on 1 July and include detailed changes to sub-tariffs based on close consultation with Eskom. The average increase appears to be around 9.88%, although some line items have jumped by over 400%, while others have dropped by more than 50%. Understanding the true impact requires a detailed breakdown of your exact usage profile.

For most other municipalities, real figures will likely only become clear once July bills are sent out in August. Until then, businesses are left guessing.

Why This Lack of Clarity Is a Problem

The delay in releasing finalised figures creates real business risk. If tariff increases end up being significantly higher than anticipated, your August bill might be a shock. For companies where electricity is one of the top five operating expenses, that surprise could wipe out planned margins.

It also removes the opportunity to plan ahead. If you’d known three months ago that your rates were going up 15%, you might have had time to apply for a more suitable tariff, repair an old PFC system, or move energy-intensive processes out of peak periods.

What You Can Control: Reducing Maximum Demand and Improving Power Factor

Even without finalised tariff figures, two factors are entirely within your control: your maximum demand and your power factor.

If your power factor is too low, you’re likely paying more than necessary for network access, maximum demand, and reactive power consumption, regardless of your actual energy use. These costs often show up on your bill even when consumption stays flat.

Installing or repairing a power factor correction (PFC) system typically pays for itself within a year. In some cases, it’s even faster. And as tariffs increase, the ROI improves. That’s because the cost of the equipment stays relatively flat while the monthly savings continue to grow.

Real-World Example: A Flour Mill in Gauteng

In May 2024, Alpha Power Solutions installed a large PFC system for a flour mill in Gauteng. At the time, we estimated an investment payback period of 11.2 months.

Once the system went live, the client began seeing stronger-than-expected savings, bringing the payback period down to 10.9 months. If their electricity rates go up by 12% — as many predict — that same system will reach breakeven in just 9.6 months.

Why Waiting Could Cost You More

Delaying decisions doesn’t reduce your risk, it compounds it.

If you wait for official confirmation before acting, you’re already one billing cycle behind. And even if the increases are modest, you’ll have lost the opportunity to prepare. Businesses that act now may gain a long-term cost advantage over competitors who do nothing.

It’s also worth remembering that municipalities don’t always label these charges clearly. In many parts of the world, businesses are fined for having a poor power factor. In South Africa, you’re also being penalised, you just might not know it.

What You Can Do Now

You don’t need a confirmed tariff to make a smart energy decision. Here’s where to start:

• Look at your most recent bill for signs of poor power factor or high maximum demand

• Check whether your existing PFC system is working — or whether you even have one

• Speak to your team or a qualified partner about opportunities for demand reduction

• Explore tariff options — some businesses may qualify for more cost-effective structures

• Run the numbers to estimate what you could save

Calculate What You Could Save

There’s no need to wait for someone else to make the decision for you. If you're serious about managing costs, now is the time to act, using our free Power Factor Correction Calculator. It’s a simple way to see how much you could save every month by improving your power factor — whether through repairs, upgrades, or a new installation.