Correct.
Let them know that you will contact SARS, and they will very quickly stop.

They can not charge you VAT, as they are simply a service enabler, the VAT is paid at the source of the sale when the voucher is generated, either by ESKOM direct, or the municipality you fall under.If they do not reconsider, then simply call SARS to sort the problem out.

What they can charge you VAT for is on the commission that they get from the sale, as this part is 'Vatable', between 0.25% to 1.5% , depending on the municipality or ESKOM, or in some areas R 0.75c per transaction irrespective of the value of the sale. This is the reason very few companies vend prepaid electricity on their platforms. Just not worth the effort.