NERSA's New Third-Party Wheeling Network Charges Rules Are Now Gazetted: What the Tariff Unbundling, Non-Bypassable Subsidy Charge, and Full Use-of-System Cost Recovery Mean for Every C&I Wheeling Contract Being Structured Today

The Rules Are Now Gazetted — Here's What Every C&I Wheeling Contract Must Reflect

South Africa's electricity market just cleared a major regulatory hurdle. NERSA's Regulatory Rules on Network Charges for Third-Party Wheeling of Energy — first drafted for public comment in August 2024, formally approved on 3 March 2025, and now published in Government Gazette No. 52781 — have moved the goalposts for every commercial and industrial (C&I) wheeling deal being structured in 2026. If your legal team is still working off pre-gazette assumptions, your PPA economics are almost certainly wrong.

What the Rules Actually Do

NERSA has published its regulatory rules on network charges for third-party wheeling of energy, which include the methodologies for developing transmission and distribution use-of-system charges. Crucially, the new transmission and distribution tariff codes developed by NERSA mean the methodologies described in the 2012 rules have become obsolete.

At their core, the rules do three things that directly affect C&I off-takers:

• Establish charges for all network users: The amendment is meant to determine applicable charges for the use of the system by both generators and loads connected to the transmission and/or distribution networks in South Africa, and allows for other parties to access those networks.
• Unbundle the tariff stack: The rules provide clarity and transparency on how use-of-system charges are determined, including components such as service and administration fees, connection charges, and contributions to subsidies and charges.
• Mandate contractual form: The rules set out the applicable commercial agreements required to give effect to third-party wheeling arrangements and prescribe specific conditions that must be complied with to allow third-party wheeling.

Tariff Unbundling: The End of the Black-Box Bill

For years, the greatest friction in wheeling contract negotiations was opacity — neither the off-taker nor the IPP could independently verify what the network service provider (NSP) would charge for moving electrons across the grid. The gazetted rules change that. By unbundling tariffs and defining a consistent methodology, NERSA aims to empower market participants to better forecast operational costs and assess the financial viability of wheeling agreements.

On the generation side, improved transparency enables easier comparison of electricity generation alternatives through unbundled energy charges, separating energy charges for the renewable energy programme into legacy and fixed generation capacity charges. The practical upshot: IPPs and C&I buyers can now model network cost components independently, sharpen PPA pricing, and stress-test deal economics against known tariff trajectories rather than opaque bundled rates.

The Non-Bypassable Charge: The Number Your Savings Model Cannot Ignore

This is the provision that will cause the most renegotiations. Subsidies and surcharges will be embedded in retail tariffs and recovered through a non-bypassable charge applied uniformly to all demand-side customers, ensuring fairness and preventing cross-subsidisation.

The NBC is non-bypassable in the truest sense of the word. Under the associated Trading Rules framework, categories designated as recoverable through NBCs include all network costs; legacy REIPPP programme costs for the duration of existing contracts; ancillary services costs; generation capacity costs; government-mandated social obligation subsidies (including lifeline tariffs, cross-subsidies, electrification, and new connections for poor households); NPA subsidies for energy-intensive industrial customers; and the NERSA regulatory levy.

The financial consequence for C&I buyers is structural: the energy component — which is the only portion a third-party supplier can displace — represents a diminishing share of the total customer bill as NBCs increase, and this structurally limits the value proposition for competitive supply. Any wheeling PPA that is priced purely against the full bundled Eskom tariff, without separately accounting for the NBC floor, will overstate savings for the off-taker.

Full Use-of-System Cost Recovery: No More "Free Ride" on the Network

The gazetted rules also close a loophole that had benefited early wheeling adopters. Wheeling customers will now fairly contribute to inter-tariff subsidies through the removal of the affordability subsidy credit for wheeled energy. This means the implicit discount that wheeling customers previously received — being credited for subsidies they never actually absorbed — has been formally ended.

Use-of-system charges, administrative fees, and fixed network charges remain payable in full to the NSP, and these measures ensure cost recovery for infrastructure while maintaining clarity and fairness in billing. In addition, NSPs will act as the designated top-up supplier for any shortfall in a customer's contracted energy and will charge for this service using a NERSA-approved, cost-reflective tariff; NSPs are also entitled to recover the full cost of maintaining standby capacity to ensure reliability, with charges based on each customer's peak demand.

What This Means for C&I Contracts Being Structured Right Now

Commercial and industrial customers pursuing wheeling are not ideological actors — they are responding to rising tariffs, reliability concerns, and infrastructure uncertainty. The gazetted rules don't change that motivation, but they do change the maths.

Here is what every deal team needs to revisit immediately:

• PPA pricing models must isolate the energy cost component from NBC and use-of-system charges. The savings case must be built on the energy delta only, not the full bundled tariff.
• Top-up and standby supply clauses must reference cost-reflective NERSA-approved rates, not historic fixed estimates.
• Force majeure and tariff adjustment provisions are now more important than ever. IPPs should ensure that connection and use-of-system agreements and PPAs clearly stipulate obligations, tariffs, payment terms and dispute resolution mechanisms, and include clauses that resolve potential future changes in NERSA's rules or tariffs.
• Generator licensing compliance is mandatory. The rules apply to all generators of capacity greater than 100 kW that are registered with NERSA and involved in bilateral agreements supplying wheeled energy to consumers, whether directly or via traders.

"To capitalise on the opportunities and mitigate against the risks presented by the wheeling framework, IPPs and traders should scrutinise how transmission and distribution use-of-system charges are calculated to determine pricing strategies." — Emma Roberts, Pinsent Masons

The Broader Market Signal

NERSA's move is seen as a step toward regulatory certainty and market liberalisation, aligning with global trends in energy decentralisation and consumer choice. But industry voices caution that the framework also reflects the difficulty of balancing transition with incumbent protection. A containment-focused framework risks slowing investment decisions from energy-intensive industries that need predictable power costs to remain competitive.

The debate is live: the question for the industry is whether this framework, taken as a whole, creates the conditions for a genuine transition to competitive supply, or whether it locks in the structural advantages of the incumbent for so long that the transition becomes nominal.

At SolarXgen, our view is pragmatic. The gazetted rules are a net positive — they replace a fragmented, legally uncertain landscape with a codified framework that every C&I buyer and IPP can work with. The NBC and full use-of-system cost recovery are real constraints on headline savings numbers, but they are known constraints, and known constraints can be priced, hedged, and structured around. The deals that will succeed in this environment are those built on rigorous cost-disaggregation, robust contractual protections, and a clear-eyed view of the energy-only savings a wheeling PPA can genuinely deliver.

If you are currently structuring a wheeling contract and have not yet benchmarked your model against the gazetted tariff unbundling methodology and NBC framework, contact the SolarXgen advisory team. The margin for error in wheeling economics just got a lot narrower — and a lot more visible.