Understanding business electricity tariffs in South Africa

Every South African business that uses electricity is placed on a tariff structure. That structure determines how your bill is built — the rate you pay for energy, whether demand charges apply, how time-of-use pricing works, and which fixed network or service charges appear each month.

Eskom and municipalities use different tariff schedules, but the logic is broadly the same: your tariff determines how your electricity costs are calculated.

How business electricity billing works

In South Africa, electricity is billed through two main channels:

1. Eskom direct supply
Some businesses are supplied directly by Eskom.

2. Municipal resale
Many businesses are supplied by a municipality, which purchases electricity in bulk and resells it under its own approved tariff schedule.

This matters because two businesses with similar usage can still receive very different bills depending on who supplies them, what tariff structure they are on, and how their usage profile interacts with that structure.

What makes up a business electricity bill?

Most commercial electricity bills are not just a simple “units used × rate” calculation. They usually include a combination of the following:

Energy charge (c/kWh): This is the charge for the electricity you consume. On some tariff structures, the energy rate changes by time of day, day type, and season.

Demand charge (R/kVA or R/kW): Some businesses are billed based on their highest demand during the billing period. A short spike can materially increase the month’s bill.

Network capacity or access charge: This is a fixed or capacity-based charge for being connected to the network and having a certain level of supply made available to your site.

Service charge: A recurring daily or monthly charge that helps recover costs such as operations, billing, metering, and administration.

Why tariff category matters

Your tariff should reflect the nature of your supply and usage profile — things like your connection size, demand pattern, metering arrangement, and whether your site falls under a simpler energy-only structure or a more complex tariff with demand and time-based charges.

In practice, businesses usually fall into one of these broad billing patterns:

Smaller sites: Often billed on simpler structures, with fewer moving parts and less sophisticated demand treatment.

Medium-sized commercial sites: More likely to face a mix of energy, service, and network-related charges, with tariff selection becoming more important.

Larger or more load-intensive sites: Often exposed to time-of-use pricing, demand charges, and capacity-related charges, where the wrong tariff structure can have a significant cost impact.

How do you know if you’re on the wrong tariff?

Usually, you don’t.

There is typically no warning, no proactive review, and no automatic notification telling you that your business may be better suited to a different tariff structure.

The issue only becomes visible when someone compares:

• your actual load profile,
• your billing history,
• your supply characteristics, and
• the tariff options available from your supplier.

Two businesses with similar annual consumption can still pay very different amounts depending on when they use electricity, how sharply their demand peaks, and how their site is classified for billing purposes.

What to look for on your bill

A tariff review is worth doing if you notice any of the following:

• your bill seems high relative to your actual operations,
• fixed charges keep increasing or seem inconsistent,
• demand charges appear even though you are not sure why,
• your usage pattern has changed over time,
• you have added solar, batteries, refrigeration, HVAC, or new machinery,
• you operate mainly in off-peak hours but your bill still looks heavy,
• you have multiple sites and no standard way to verify tariff fit across the portfolio.

How OptiRate helps

OptiRate analyses electricity accounts against actual usage and billing structures to identify tariff mismatch, billing risks, and savings opportunities.

Across 5,549 accounts analysed, we’ve identified R39,662,305 in savings opportunities.

A meaningful share of that came from sites on suboptimal tariff structures or with billing elements that did not align with their actual consumption profile.

Start your free analysis at optirate.io. No registration required.