Electricity Tariff Increases in Cape Town

Electricity tariffs in Cape Town have risen for the 2025/26 financial year, effective from July 1, 2025, following approvals by the National Energy Regulator of South Africa (NERSA) and adjustments by the City of Cape Town. These changes reflect broader national energy cost pressures, including Eskom's wholesale increases. At AMG Properties, we aim to provide a neutral overview of these hikes and practical ways to mitigate their impact on household and business budgets, particularly for property owners and renters in the Western Cape.

Understanding the Tariff Increases

The City of Cape Town's electricity tariffs for 2025/26 vary by customer category and consumption levels, with a block structure that charges lower rates for the first 600 kWh (Block 1) and higher rates for usage above that (Block 2). Residential tariffs include options like the Lifeline tariff (for qualifying low-income households with free basic electricity) and the Home User tariff (for standard residential properties).

Key changes include:

Lifeline Tariff: Energy charge increased by approximately 9.88% to R2.2653 per kWh (excl. VAT) for both blocks.
Home User Tariff: The fixed service and wires charge rose by 38.71% to R339.89 per month (excl. VAT), while Block 1 energy charge decreased slightly by 1.70% to R2.9362 per kWh (excl. VAT), and Block 2 decreased by 7.05% to R3.8423 per kWh (excl. VAT).
Overall Average: Residential increases average around 7-11.78%, depending on consumption and tariff type, influenced by Eskom's 12.72% hike to municipalities.

These adjustments are calculated based on factors like Eskom's bulk purchase costs, municipal operational expenses, and NERSA guidelines. Higher consumption households may see steeper effective increases due to the progressive block system. All rates exclude VAT, which adds 15%.

The Impact on Wallets

For an average Cape Town household consuming 900 kWh monthly, the hike could add R100-R300 to bills, depending on the tariff. This compounds existing economic pressures, such as inflation and loadshedding costs. Property owners with rentals may face decisions on passing increases to tenants, while businesses in commercial properties could see operational expenses rise by similar margins.

Strategies to Alleviate Financial Pressure

While tariffs are set municipally, individuals and property managers can take steps to reduce consumption and costs:

Energy Efficiency Upgrades: Switch to LED lighting, energy-efficient appliances (e.g., A+++ rated), and smart thermostats. These can cut usage by 10-20%. For properties, insulating homes and sealing drafts reduces heating/cooling needs, potentially saving R500+ annually.
Consumption Monitoring: Use the City's online portal or smart meters to track usage. Shift high-energy activities (e.g., laundry, geyser heating) to off-peak times if on a time-of-use tariff.
Solar and Renewable Options: Install solar panels with batteries for self-generation. The City's Small-Scale Embedded Generation (SSEG) program allows selling excess power back at R1.0123 per kWh (excl. VAT), plus a R0.25 incentive. Initial costs (R50,000-R150,000 for a basic system) can be offset by savings and tax incentives, with payback in 5-7 years. This also boosts property value by 3-5% in energy-conscious markets.
Budgeting and Assistance: Apply for the Lifeline tariff if eligible (income-based, includes 60 kWh free monthly). Explore municipal rebates for pensioners or low-income households. Use apps like Prepaid24 for better bill management.
Lifestyle Adjustments: Unplug unused devices, use geyser timers, and opt for natural ventilation over air conditioning. Community solar shares or energy audits (free via some providers) can be further optimised.

AMG Properties' Perspective

As property experts, AMG Properties notes that energy-efficient features—like solar-ready homes or insulated builds—can shield owners from hikes while enhancing appeal to eco-aware buyers or tenants. We're seeing demand for such properties rise, potentially increasing resale values. Contact us for advice on energy-smart investments or upgrades.

Looking Ahead

Electricity costs may continue to rise with national energy challenges, but proactive measures can provide relief. For the latest tariffs, check the City of Cape Town's website.