NERSA's Open Tariff Hearings: How to Model Your July Exposure Before the Window Closes

The window has already partially closed. NERSA approved Eskom's retail tariff application on 5 March 2026, and direct Eskom customers have been paying 8.76% more since 1 April 2026. But for the majority of commercial and industrial properties — those supplied through municipalities — the decisive tariff event lands on 1 July 2026. That is the date that matters most to your operating budget, your energy cost model, and your decision on whether to accelerate a solar or BESS investment right now.

This article unpacks what actually happened in the NERSA MYPD6 process, what it means for your July energy bill, and — critically — what financial modelling you should be running before that window closes.

What Just Happened: The MYPD6 Saga in Plain English

South Africa's current tariff trajectory is the product of a regulatory error, a court battle, and a redetermination process that unfolded over the past eighteen months. Understanding the sequence matters because it shapes future tariff risk, not just the July number.

When NERSA approved Eskom's sixth Multi-Year Price Determination (MYPD6) in January 2025, it set increases of 12.74% for 2025/26, and modest outer-year increases of just 5.36% for 2026/27 and 6.19% for 2027/28. Eskom immediately challenged this, claiming the regulator had excluded more than R100 billion in asset and depreciation values from its Regulatory Asset Base (RAB) calculation. A confidential settlement was initially reached, but civil society organisations including AfriForum took the matter to court. The High Court ruled that excluding public input was unlawful, and ordered NERSA to reopen the process and conduct a full public consultation.

NERSA's December 2025 consultation paper acknowledged the error and proposed recovering R76 billion in additional allowable revenue over the MYPD6 period — comprising over R62 billion in depreciation costs and over R14 billion in returns. The public comment process closed on 21 January 2026. NERSA completed its redetermination on 7 February 2026 and settled on R54.7 billion in additional allowable revenue, phased over three years: R12 billion in 2026/27, R23 billion in 2027/28, and R19.7 billion thereafter. The Energy Regulator formally approved the retail tariff application on 5 March 2026.

The Numbers That Matter Right Now

• Eskom direct customers: 8.76% increase effective 1 April 2026
• Municipal bulk customers: 9.01% increase effective 1 July 2026
• 2027/28 outlook: A further 8.83% increase already approved — up from the original 6.19%

For context: the original NERSA approval had pencilled in just 5.36% for the year now landing at 8.76%. That is a 63% overshoot on the outer-year guidance that your treasury team was working with twelve months ago. The 2027/28 number has similarly blown out. This is not a one-year anomaly — it is a structural pattern.

The Municipal Tariff Multiplier Effect: Why July Is the Real Number

If your property draws supply from a municipality — which covers the majority of commercial properties in South Africa's metros — your tariff increase does not arrive on 1 April. It arrives on 1 July 2026, and it will not be exactly 9.01%. Municipal authorities buy electricity in bulk from Eskom and then apply their own margin and infrastructure cost recovery before billing end-users. In practice, the pass-through to commercial tenants and owner-occupiers is typically higher than the base Eskom wholesale increase.

Municipalities are currently running their own public participation processes on proposed tariff increases for the 2026/27 financial year, as NERSA requires. Several metros — including Sol Plaatje Municipality — have published public notices in late March 2026 calling for comment on proposed increases. The final municipal tariff schedules will be confirmed through their budget processes by late May or early June, but the direction is already set: budget for a headline cost increase of at least 9% to 12% at the meter, depending on your municipality and supply category.

What This Means for Your Energy Cost Model

Here is the core modelling problem facing CFOs and finance directors today: your FY2027 budget was likely built on NERSA's original outer-year guidance of ~5–6%. That assumption is now obsolete. The correct modelling baseline for 1 July 2026 is a minimum 9% increase on your current municipal tariff, with compounding pressure of roughly 8.83% in 2027/28 already baked in by the approved MYPD6 determination.

Run those numbers forward over a five-year modelling horizon and the compounding effect is material. A commercial or industrial facility currently paying R2.5 million per year on grid electricity — a relatively modest figure for a medium-sized warehouse or light manufacturing facility — faces the following trajectory on current NERSA-approved rates alone:

• July 2026: ~R2.73 million (+9.01%)
• July 2027: ~R2.97 million (+8.83%)
• Five-year cumulative spend (2026–2031, holding current trajectory): Exceeds R16 million before any further increases beyond the approved MYPD6 period

And the trend beyond MYPD6? There is no regulatory basis to expect meaningful relief. Eskom's Energy Availability Factor (EAF) has improved — reaching 65.85% year-to-date to mid-March 2026, with baseload units now available more than 98% of the time compared to single-digit availability two years ago. But improved plant performance does not reduce the structural cost recovery pressure built into Eskom's RAB — it simply removes load shedding as a short-term political justification for tariff resistance. The cost escalation pressure from Medupi, Kusile, and the now-recalculated depreciation base is a multi-decade structural feature, not a temporary spike.

The Investment Case: What Changes in Your Solar/BESS Model Right Now

Every rand-per-kWh increase in your avoided grid cost improves the financial case for commercial solar and BESS. But the July 2026 tariff event does more than improve an IRR by a percentage point — it changes the urgency calculus fundamentally.

1. The PPA Tariff Lock-In Is Worth More Than It Was Six Months Ago

A Power Purchase Agreement (PPA) for commercial solar fixes your generation cost in rands-per-kWh for 10 to 20 years. The escalation built into a well-structured PPA is typically CPI-linked or capped below grid tariff escalation. With grid escalation running at 8–9% annually — against CPI of roughly 3–4% — the spread between your contracted PPA rate and the grid tariff compounds in your favour with every passing year. The July 2026 increase widens that spread materially. If you are currently modelling a PPA at a 15–20% discount to grid, that discount grows year on year.

2. BESS Peak Demand Shaving: The GCC Charge Is Now Material

NERSA's 2026/27 tariff structure includes a key structural change: the Generation Capacity Charge (GCC) has been increased to 30% of the originally proposed retail tariff plan rand-value, up from 20% in 2025/26. Simultaneously, energy rates for affected tariffs have been lowered to offset this. The effect is a shift of cost recovery toward fixed capacity charges — which means your peak demand component is becoming a larger share of your bill. BESS-enabled demand management and peak shaving strategies therefore become more financially productive under the new tariff structure, not just as backup power but as a direct tool to reduce your monthly capacity charge.

3. SSEG Registration Urgency

Eskom has confirmed that registered small-scale embedded generation (SSEG) customers can export excess energy into the grid. This is a direct commercial benefit for correctly registered systems — but the operative word is registered. Properties that have installed solar without completing formal SSEG registration with their municipality or Eskom are leaving money on the table and carrying regulatory risk. With the July tariff revision incoming, now is the time to audit your current position.

4. Financing Structure: Zero-Capex Models Make Sense in a Rising Tariff Environment

In a rising tariff environment, the opportunity cost of delay is measurable. A zero-capex PPA or lease structure eliminates the capital barrier while still locking in below-grid energy pricing from day one. The risk of waiting — hoping for policy clarity or a lower tariff — is asymmetric: NERSA has already approved 8.83% for 2027/28. The next MYPD cycle will follow the same structural cost pressures. There is no credible scenario in which grid tariffs are flat or falling in rand terms.

What Should You Do Before July?

Three actions that deliver direct financial value before the 1 July 2026 tariff reset:

1. Model your July exposure now. Pull your last 12 months of electricity bills, calculate your current blended rand-per-kWh rate, and apply a 9–12% increase to model your new baseline. Then model a solar + BESS scenario against that baseline with PPA escalation capped at CPI. The delta is your business case.
2. Commission a site feasibility assessment. A proper commercial feasibility study — covering roof area, consumption profile, network agreement requirements, SSEG application timelines, and financing structures — typically takes four to eight weeks. If you want a funded system generating savings from Q3 2026, your window to initiate that process is now.
3. Audit your current SSEG compliance status. If you have an existing solar system, confirm it is correctly registered. Verify your metering configuration, your net metering agreement (if applicable), and your current tariff category to ensure you are not inadvertently paying a tariff premium.

The Structural Takeaway

NERSA's MYPD6 redetermination was not a one-off administrative correction. It was a public demonstration of how structurally exposed South African businesses are to a regulatory process where the methodology is contested, the calculations are subject to legal challenge, and the outcome is systematically above inflation. Eskom has already loaded R23 billion of the approved R54.7 billion additional revenue recovery into 2027/28 — meaning the 8.83% approved for that year is not a ceiling, it is a floor.

For CFOs and property directors, the correct framing is not "should we do solar?" It is: "what is the cost of not having contracted below-grid energy pricing when the next tariff determination arrives?" Given NERSA's own track record, that question answers itself.