Independent Democrats MP Lance Greyling was speaking during a briefing to Parliament's energy committee by members of the electricity distribution industry.

He said municipalities had been given a monopoly to charge what they liked for electricity.

"There is no regulation over the surcharge," he said.

"Eskom's monopoly in terms of generation is regulated by the regulator. Municipalities have a monopoly within their borders over distribution.

"But if municipalities continue to put prices up, this is going to be an overall threat to that source of income."

Greyling said there was a "massive disincentive" on a municipal level for promoting energy efficiency measures.

"Clearly if your revenue base depends on the sale of electricity, you are not going to be implementing in a very aggressive fashion, energy efficiency strategies," he said.

The price of solar panels was reducing quickly so it would be cheaper for households to install them instead of buying electricity from municipalities.

The SA Local Government Association (Salga) has said that 30 to 40 percent of local government revenue comes from electricity sales.

Greyling said prices could be increased on other services.

"Are we pricing water, sewerage properly? Are we pricing all other services local government provides properly?

"...Our method of funding local government through electricity sales is not sustainable into the future."

Salga's infrastructure services executive director Mthobeli Kolisa told the committee that there was "general acceptance" in the government that the pricing structure had to be reviewed.

He said however, that "under the current fiscal arrangements" the viability of local government had to be considered before any changes were made.

"Unlike electricity if a consumer stops paying for water, refuse removal or sanitation, this has an impact that would have to be absorbed by the government," Kolisa said.

"If you increase prices of the other services it means nothing. Because even if they don't pay you still have to provide those services."

The other alternative, he said, was to increase rates on houses.