The implementation of the Electricity Regulation Amendment Act represents a big structural evolution in South Africa’s energy market. By breaking down Eskom’s historical monopoly and setting up the South African Wholesale Electricity Market, the legislation enables a competitive, multibuyer and multiseller trading system. While the independent National Transmission Company South Africa is actively working to resolve historical national transmission constraints, a critical market bottleneck is emerging at the municipal level. Local governments have positioned themselves as the primary gatekeepers of the ongoing energy transition. Under section 156(1) of the constitution, municipalities possess exclusive executive authority over local electricity reticulation. This means that while an independent power producer (IPP) can build and operate a generation facility anywhere in the country, the physical delivery of that electricity to an end user located within an urban boundary depends entirely on the local municipality’s power grid and formal administrative approval. This legal structure creates an inherent conflict of interest. Local municipalities operate simultaneously as the neutral referees who evaluate and grant network access and as active market players trying to protect their own retail power revenues. Most municipal funding models depend heavily on high-margin electricity reselling. Local governments buy bulk electricity from Eskom and resell it to commercial and industrial customers at a premium. They use these profits to, among other things, cross-subsidise nonrevenue civic services such as refuse removal and road maintenance. When a commercial client enters into a private power purchase agreement with an IPP, the municipality loses its most lucrative income stream, creating a powerful fiscal incentive to delay open market participation. This institutional gatekeeping manifests through the following primary regulatory and technical hurdles:Municipalities use their legal authority to establish localised wheeling and network-use fees. By inflating network use-of-system (UoS) charges and capping unbundled energy credits, they possess the power to potentially systematically alter transaction economics to ensure private IPP power cannot financially compete with municipal retail rates. Instead of issuing explicit rejections, authorities may delay market access by failing to finalise cost-of-supply (CoS) studies, stalling council-approved wheeling frameworks and creating opaque timelines for approving connection and use-of-system agreements. Licence conditions give local distributors final authority to deny or grant grid access based on substation capacities. Because developers lack real-time, independent verification of transformer capacities, a municipality may declare its infrastructure fully constrained to freeze third-party traders while fast-tracking its own preferred projects. Standardised financial accounting rules to manage energy movements from Eskom networks into municipal grids remain fragmented. This absence of automated cross-boundary reconciliation creates an accounting dead-end for developers wheeling power across different supply areas. A few forward-thinking local authorities have started unbundling their electricity frameworks. The City of Cape Town is piloting a multibuyer, multiseller system while the George municipality has launched an unbundled time-of-use wheeling credit model. Furthermore, Overstrand has standardised monthly billing reconciliations and Nelson Mandela Bay is successfully integrating localised renewable allocations in the Coega Industrial Development Zone. However, these localised initiatives remain isolated exceptions to the national norm. For a competitive national energy market to thrive, South Africa must fundamentally overhaul the underlying municipal financial model. Local government funding must be systematically decoupled from volumetric energy sales and shifted towards predictable, transparent network service fees. Grid allocation rules must enforce strict use-it-or-lose-it principles to stop paper projects from hoarding limited network capacity and distributors must be legally mandated to publish real-time grid capacity maps. Ultimately, until technical grid connection evaluations are managed entirely on safety merits by independent entities, rather than a municipality’s financial preferences, local governments will continue to stifle the broader private energy market. • Tlhong is director: corporate commercial at TGR Attorneys Incorporated.