South Africa: Unlawful Prepaid Electricity Commissions Reach 25%

• Prepaid electricity vendors in South Africa are unlawfully adding commissions of up to 25% to Nersa-approved tariffs.
• This practice, confirmed by industry experts, lacks transparency and includes additional transaction fees and inflated meter-reading charges.
• A listed company charges 9% additional commission, while another metering company retains 12% commission from monthly sales.
• The revised Electricity Pricing Policy (EPP), gazetted for public comment in August 2026, aims to introduce a standardized pricing framework and monitoring to regulate these vending fees.
• The issue disproportionately affects vulnerable consumers and is prevalent in estates, landlord-tenant agreements, and townships, where effective prices often exceed regulated tariffs.

Consumers across South Africa are frequently subjected to unlawful prepaid electricity commissions, with some vendors adding as much as 25% to the approved tariffs.

Consumers across South Africa are frequently subjected to unlawful prepaid electricity commissions, with some vendors adding as much as 25% to the approved tariffs. This practice, confirmed by two industry experts, highlights a significant lack of transparency in the electricity supply chain, where the various parties involved and their respective charges remain undisclosed to the end-user. While the tariffs set by Eskom and municipalities undergo continuous scrutiny, the vendors of prepaid tokens, who are a crucial part of the distribution network, largely operate without oversight.

This issue manifests in various forms, from direct transaction fees to inflated commissions. Chris Bosch, CEO of Rural Maintenance, notes instances where consumers are charged an additional R10 or R20 simply to complete a transaction, a particularly burdensome cost for those purchasing small amounts like R50 worth of electricity. Bosch has observed commissions reaching up to 20% and recounted a case where a shopping centre landlord imposed an unlawful R500 meter-reading fee, despite this cost already being covered by the regulated tariff. Business owners who questioned these excessive charges faced threats of eviction.

Ayal Rosenberg, Managing Director of WeBill, corroborates that adding commission to Nersa-approved tariffs is a common industry practice, despite its illegality. He illustrates this with examples, including a listed company that levies a 9% additional commission, inclusive of VAT, on 120,000 middle and working-class customers using its vending platform. Of this, the metering company receives four percentage points (three of which cover actual costs), the retailer (such as a supermarket or bank) gets approximately three percentage points, and the company itself retains two. Another instance involves a Free State metering company managing 25,000 meters in sectional-title units, generating about R25 million in electricity sales monthly. This company retains approximately R2 million per month, equivalent to a 12% commission excluding VAT, with R500,000 of that paid to the retailer. Rosenberg indicates that these prepaid electricity vending fees, excluding VAT, typically range from 13% to 25% above the Nersa-approved tariffs.

Under current South African law, no entity is permitted to sell electricity at a tariff that has not been explicitly approved by the National Energy Regulator of South Africa (Nersa). This legal principle is often disregarded by vendors, who operate in an unregulated environment, allowing for significant variations in the commissions they charge. This creates a fertile ground for excessive fees and unfair margins, directly impacting consumers who rely on prepaid electricity.

In response to these challenges, the revised Electricity Pricing Policy (EPP) for South Africa, gazetted for public comment in August 2026, highlights the unregulated nature of these vendors and the inconsistent commissions. The EPP proposes the establishment of a standardized pricing framework and a robust monitoring mechanism. The overarching goal of these proposed measures is to ensure that all prepaid electricity vending fees are transparent, fair, and consistent across the sector. Implementing these changes is expected to ensure that prepaid electricity vending services operate in a regulated, transparent, and consumer-protective manner, standardizing vendor practices throughout the industry.

The prevalence of unlawful prepaid electricity commissions in South Africa disproportionately affects vulnerable consumers, particularly those in informal resale arrangements. Chris Bosch suggests that every distributor should provide a no-cost option for customers to purchase electricity at Nersa-approved tariffs, perhaps through a municipal application. While acknowledging that consumers might opt for more convenient purchasing methods, such as credit card or banking app transactions, which could justify a premium for the added convenience, the core tariff must remain accessible without additional, unapproved charges.

Deon Conradie, an expert in electricity pricing, emphasizes that the policy objective of integrating vendors into the regulatory framework and tightening the South Africa electricity reseller regulation is particularly pertinent for various entities. This includes estates, landlords, body corporates, student accommodation providers, and those involved in informal resale arrangements. In these contexts, the effective price paid by the end-user can substantially exceed the underlying regulated electricity tariff. This issue is especially problematic in informal resale scenarios between landlords and tenants, as well as with vendors operating in townships, where the lack of oversight on unlawful landlord electricity charges ZA can lead to significant exploitation.

Lawyers and compliance officers must audit prepaid electricity vending practices for clients (landlords, body corporates, resellers) to ensure strict adherence to Nersa-approved tariffs, as current widespread markups are unlawful and Nersa's draft revised Electricity Pricing Policy signals increased regulatory scrutiny and enforcement.

Source: Original reporting via Moneyweb