South African municipalities have just two days left to influence electricity trading rules that will reshape how they operate, budget, and deliver services.
NERSA’s recently published Consultation Paper introduces a structural shift that moves municipalities from energy retailers to regulated Network Service Providers.
Written submissions close 10 December, with public hearings in January 2026 and final rules expected by March.
“Municipalities now have a historic opportunity to shape the future of electricity trading,” says Christo Nicholls, Chief Executive Officer of Utility Consulting Solutions (UtCS). “Immediate action on both process participation and institutional readiness is critical, and UtCS is ready to guide them every step of the way.”
What the New Rules Actually Mean
NERSA’s Draft Rules and Consultation Paper formally introduce licensed Traders into the electricity market.
Customers will be able to choose their electricity supplier. Municipalities, in turn, will stop selling energy directly and instead manage the network, billing customers only for network use, services, and administration.
Operationally, this is far from straightforward. Municipalities will be required to accommodate multiple suppliers per customer, split bills between network charges and trader energy charges, reconcile high-volume data within five days, manage complex time-of-use metering, and integrate information from several head-end systems. Most municipal systems were not designed for this environment.
The Revenue Shock
Electricity sales currently underpin municipal budgets. Under the new model, this income shifts to traders. Municipalities will rely on use-of-system charges, fixed fees, and administrative costs; structures many have not yet modelled or stress-tested.
If tariff restructuring is not accurate or cost-reflective, municipalities risk major revenue shortfalls.
The rules provide for top-up supply charges and standby capacity fees, but both require rigorous cost justification and NERSA approval. Misalignment here could undermine service delivery.
The Technology and Skills Gap
Complying with the Draft Rules requires advanced metering infrastructure capable of automated, real-time time-of-use readings and consolidated data integration across traders and generators. Existing municipal systems generally cannot handle multi-supplier billing, wheeling credits per time-of-use period, or the governance burden required under the Protection of Personal Information Act.
The capacity challenge is equally significant. Municipalities will need specialised operational, financial, ICT, metering, and regulatory expertise to function effectively as Network Service Providers. Most are already under strain.
Why the Deadline Matters
NERSA’s process is intentionally fast, with Phase 1 focused on Transmission and High Voltage customers and Phase 2 expanding to all customers once the market stabilises. Phase 1 creates the template. If municipalities do not submit technically grounded input now, the final rules may assume capabilities they do not yet have, locking them into obligations they cannot meet.
Where UtCS Fits In
UtCS has been preparing for this shift for several years. The company provides digital energy trading platforms that manage multi-supplier billing environments, integrate with multiple AMI systems, support time-of-use reconciliation, and prepare municipalities for Market Operator interaction.
UtCS also delivers human capacity augmentation- supporting technical teams, billing and finance units, ICT departments, and executive leadership with the knowledge and systems required to operate as Network Service Providers.
To meet the immediate regulatory deadlines, UtCS helps municipalities with submission drafting, public hearing preparation, tariff restructuring, institutional impact assessments, and revenue scenario modelling based on different rule configurations.
The Bigger Picture
South Africa’s electricity market is moving decisively into a competitive environment. The transition is comparable to telecoms liberalisation, but with far higher stakes.
Municipalities that act now will have a say in shaping rules that underpin future revenue stability, service delivery, and governance. Those that do not risk being left behind as the market reforms take hold.
