Municipal Bulk Tariff Hike of 9.01% Lands in July: C&I Sites on City Supply Face a Second Hit
NERSA has approved a 9.01% bulk tariff increase for municipalities, effective 1 July 2026. For C&I properties on city supply, this is the second tariff hit of the financial year — and the effective retail increase will likely be higher once municipal margins are applied.
Commercial and industrial properties supplied through a municipal network are about to absorb their second tariff shock of the 2026/27 financial year. Eskom's bulk supply tariff to municipalities rises by an average of 9.01% on 1 July 2026 — and that increase flows directly through to every retail electricity account issued by a city or town. For CFOs and operations directors already managing a cost base squeezed by the 8.76% Eskom direct-customer increase that landed on 1 April 2026, the July date is not a distant planning item. It is 93 days away.
What NERSA Actually Approved — and Why the 9.01% Is a Floor, Not a Ceiling
On 5 March 2026, NERSA formally approved Eskom's Retail Tariff and Structural Adjustment (ERTSA) application for FY2027. NERSA approved Eskom's ERTSA application on 5 March, authorising a 9.01% tariff increase effective from 1 July 2026 to 30 June 2027. Municipal bulk purchasers will implement their tariff increases, averaging 9.01%, from 1 July 2026, in line with the Municipal Finance Management Act (MFMA), which requires municipalities to implement tariff changes at the start of their financial year.
The word averaging matters here. The 9.01% is Eskom's bulk supply increase to the municipality — it is the minimum pass-through cost. Each municipality then adds its own distribution margin, network maintenance costs, and operational overheads before setting its retail tariff. The national electricity price increase for the 2025/2026 financial year granted to Eskom by NERSA was approved at 11.32% for local authorities — yet eThekwini, for example, balanced its budget with an average retail increase of 12.72%. The same dynamic will repeat in July 2026: the 9.01% Eskom bulk hike is the input cost, not the final bill.
The headline percentage does not tell the full story. The increases are not limited to energy charges alone; businesses are also facing pressure from network, legacy, and other structural cost components, which continue to push total bills higher. Peak charges could rise by almost 60c per kWh during high-demand winter months, meaning a 24/7 operation could pay an extra R200 000 per month for that period alone.
The Double-Hit Mechanism for City-Supplied C&I Sites
For commercial properties connected to Eskom directly, the FY2027 increase was a single 8.76% adjustment on 1 April. For properties on municipal supply, there is a structural two-step:
- April 2026: NERSA approved an average electricity price increase of 8.76% for customers supplied directly by Eskom, with new tariffs applying from 1 April 2026.
- July 2026: The 9.01% increase will be implemented from 1 July 2026 until 30 June 2027 for municipal customers.
The July increase affects the majority of commercial buildings in South Africa's metros — shopping centres, office parks, warehouses, industrial facilities, and schools that sit within a municipal licensed area. These customers do not receive a quarterly tariff letter from Eskom; they receive a municipal account, and many only notice the tariff change when their July bill arrives. By then, the Q3 budget is already broken.
The Cumulative Context
In recent years, tariff increases have been relentless: 15.63% in 2021/22, 9.61% in 2022/23, 18.7% in 2023/24, 12.7% in 2024/25, and 12.74% in 2025/26. The FY2027 increases are lower in percentage terms than the prior two years, but they compound onto a base that has already escalated significantly. The moderation is also partially a product of a contested regulatory process: when the two parties tried to have a settlement made an order of court, the High Court in Pretoria threw it out, with the judge finding that the secret settlement between Eskom and NERSA had unlawfully excluded the public from a decision that directly affects every electricity consumer. The court-ordered redetermination, completed on 7 February 2026, ultimately produced the 8.76%/9.01% outcomes rather than the higher figures originally feared.
The timing could not be worse, as these tariff increases come into effect alongside a looming fuel price shock, feeding directly into transport, logistics, and input costs. For many businesses, this creates a compounded cost environment that is difficult to absorb without either raising prices or cutting back elsewhere.
What This Means for the Commercial Property Decision
For CFOs and facilities managers, three implications stand out:
- Budgets set before July must be revised. A 9.01% bulk increase that municipalities then layer with their own margins means the effective retail increase on your July account could be materially higher than 9%. If your FY27 energy budget was set against FY26 tariffs, the shortfall will be real.
- Time-of-use exposure is intensifying. The FY2027 tariff structure continues the phase-in of Eskom's Generation Capacity Charge (GCC). The 2026/27 Eskom tariffs have been adjusted in accordance with NERSA's MYPD6 decisions issued on 30 January 2025 and 7 February 2026, effective from 1 April 2026 for Eskom direct customers and from 1 July 2026 for local authority (municipal) tariffs, with the GCC rate increased to 30% of the originally proposed FY2025 rand-value, up from 20%. Properties with high demand during winter peak periods face disproportionate cost increases.
- The self-generation investment case has strengthened again. Relying on a single source of electricity — particularly one with structurally rising costs — is becoming increasingly risky. Businesses that diversify their energy supply by incorporating on-site solar, battery storage, and wheeling are better positioned to manage cost volatility and build long-term resilience.
The Solar + BESS Response: Acting Before July
For C&I properties in municipal supply areas, the window between now and 1 July 2026 is operationally significant. A funded commercial solar PPA or lease agreement locks in a fixed or index-linked energy rate that is structurally below municipal retail tariffs — and remains so regardless of the next NERSA determination. A correctly sized BESS adds peak-shaving capability that directly targets the winter TOU peak exposure, where the per-kWh cost is highest and rising fastest.
The feasibility logic is straightforward: if your current municipal tariff is already above R2.50/kWh all-in (including demand charges), and July adds another 9%+ on top of that, the payback arithmetic on a funded solar installation improves with each successive tariff cycle. Zero-capex PPA and lease models mean there is no reason to wait for a capital budget cycle — the energy cost saving starts from day one of commissioning.
The July 2026 municipal tariff increase is not a future risk — it is a confirmed cost event with a date. The question for every commercial property on city supply is not whether to act, but whether to act now or absorb another year of compounding increases first.