Most retail CFOs sign off the electricity bill once a month. Almost nobody reads the line items. The number at the bottom gets attention. The rest of the page is a wall of acronyms, kVAs, kVArh penalties, and demand charges that nobody on the finance team has time to decode.
That's the gap Verifyt was built around.
This guide walks through what's actually being charged on a South African commercial electricity bill, why each charge exists, and where the most common errors hide.
The three buckets every bill is built from
Strip a commercial electricity bill down to its skeleton and you're looking at three buckets:
- Consumption. The energy you actually used. Measured in kWh.
- Maximum Demand. The capacity the supplier had to keep available for you, even if you only used it for half an hour. Measured in kVA.
- Service charges and penalties. Fixed costs of being connected to the grid, plus penalties when your usage profile costs the network more than the contract assumed.
Almost every line on the bill maps to one of these three. Once you can place each line in its bucket, the bill stops looking like noise.
Bucket 1: Consumption
This is the number most people understand. You used X kilowatt-hours over the month. The supplier multiplies by a per-kWh rate and bills you.
What changes between tariffs is how that per-kWh rate is structured:
- Flat rate. One price per kWh, regardless of when it was used. Common on smaller commercial tariffs. Simple, but expensive if you draw a lot of power during peak hours.
- Time-of-Use (TOU). The price varies depending on when in the day the energy was drawn. Peak hours cost the most. Off-peak hours cost the least. The differential between peak and off-peak rates in some South African regions exceeds R2 per kWh. A retailer that runs aircons through the morning peak window pays meaningfully more for the same kWh than a retailer that doesn't.
- Stepped tariff. The price per kWh changes once total monthly consumption crosses preset thresholds. The first 1,000 kWh might be priced one way, the next 5,000 another.
For most commercial retail sites, consumption is 50% to 100% of the bill, depending on how big the maximum demand component is.
One important note: your Power Factor (we'll get to it shortly) does not change consumption charges. Power Factor only affects the Maximum Demand bucket.
Bucket 2: Maximum Demand
This is the bucket most people don't understand. It can run up to 45% of a commercial bill.
The supplier sells you two things: the energy you actually use, and the right to draw a certain peak amount of power at any given moment. If your store's load suddenly spikes (a chiller cycles on, the aircons all kick in, the deep-fryers fire up at lunch service), the network has to be able to serve that spike. The supplier provisions infrastructure for your peak, not your average.
That capacity gets billed as Maximum Demand.
Two ways suppliers calculate it:
- Measured demand. The highest kVA pulled in any 15-minute or 30-minute interval during the billing cycle. One bad half-hour sets your demand charge for the whole month. A momentary spike at 11:47 am during peak season can drive a charge that shows up on the bill 4 weeks later.
- Notified Maximum Demand (NMD). You contract with the supplier for a maximum capacity (say, 200 kVA). You pay for that capacity whether you use it or not. If you exceed it, you get hit with excess-demand penalties.
The unit on this bucket is kVA, not kW. That distinction matters because of Power Factor.
Power Factor: where the silent overpaying happens
Power Factor is the ratio between real power (kW, the energy that does useful work) and apparent power (kVA, the total power your equipment draws including the inefficient bits).
A perfect Power Factor is 1.0. Real-world commercial sites often run at 0.85 or worse, especially with older fluorescent lighting, large motor loads, and unbalanced phase loading.
A 0.85 Power Factor means your kVA demand is roughly 18% higher than it would be at 1.0 for the same useful work. That 18% goes straight to the Maximum Demand line, plus often a separate Reactive Energy penalty for the kVArh you generated.
Reactive Energy is its own punitive line item. The supplier charges you for every kVArh of reactive power, on top of the inflated kVA demand it caused. Two penalties for the same underlying problem.
Most retail tenants have no visibility into their Power Factor at all. The landlord sees it, the supplier sees it, the tenant gets the recharge with the inflated number baked in.
Bucket 3: Service charges and penalties
Smaller than the first two buckets in rand value, but worth understanding because they're where the silliest errors live.
- Fixed connection charges. Monthly or daily, based on connection size or contracted NMD. Covers the supplier's fixed cost of having you on the network.
- Administrative charges. Smaller line items for billing, customer service, etc.
- Reactive Energy charges. Already covered above. Power Factor penalty.
- Excess NMD charges. If your contracted NMD is 200 kVA and you pull 215 kVA in any 15-minute window, you pay a punitive multiplier on the excess. These charges can be brutal because the multiplier is designed to discourage overload.
In retail tenant land, the recharge from your landlord usually sweeps these penalties into the per-store apportionment. You see "your share" of the building's NMD penalty, with no visibility into what triggered it or whether you can do anything about it.
Why the bill is wrong more often than people think
Now that you can place each line in its bucket, it's clearer where the errors enter:
- Consumption errors. Meter reads that drift, estimated readings that get carried for months, manual transcription mistakes between meter and invoice.
- Demand errors. Maximum Demand reset incorrectly between billing cycles. NMD calculated against the wrong contract. Peak windows applied to the wrong tariff.
- Service charge errors. Reactive Energy penalties applied at a higher rate than the contract specifies. Excess NMD charges based on a stale contracted demand figure.
- Recharge errors. When the landlord re-bills the tenant, the splits between stores can drift, admin fees can creep in that aren't supported by the lease, common-area allocations can get the maths wrong.
Each of these is a small, technical error. Across 12 months and many sites, they compound into real money.
Where Verifyt fits
Verifyt audits every line of every bill against your contracted tariff and the rates published by your municipality, then audits your landlord's recharge invoice against the meter report. Two passes, every bill, every store. Layer 1 catches errors at the supplier or municipality. Layer 2 catches errors at the recharge.
The bookkeeper checks the maths inside the bill. The annual audit consultant checks once a year. Verifyt checks every bill, line by line, both layers, every month.
If you've never had your bills audited line-by-line, the first audit usually finds something. Sometimes it's a meter that's been mis-read for a year. Sometimes it's a Reactive Energy penalty applied at the wrong rate. Sometimes it's a common area charge allocation that's been quietly wrong since the lease started. Sometimes it's an NMD that was set 5 years ago and never reviewed.
The bill stops being a wall of acronyms once someone is reading it.