Eskom hikes prices

Eskom has confirmed that it will implement its annual price increase on 1 April 2024.

The National Energy Regulator of South Africa (Nersa) granted Eskom a 12.74% increase for its direct customers, combined with a 25.64% affordability subsidy.

“The average increase applied to the key industrial and urban tariffs will be 13.29% due to the increase in the affordability subsidy charge,” Eskom stated.

“The affordability subsidy charge is raised as a subsidy to the Homelight 20A tariff and is determined by Nersa,” it explained.

“This charge exists due to historically lower Homelight 20A tariff increases and is paid by the non-municipal large industrial and urban tariffs.”

Nersa also granted a 12.72% increase to municipal customers.

However, while Eskom’s prices go up today, municipalities will only increase their tariffs to customers on 1 July.

Eskom lodged its annual price adjustment application with Nersa on 10 October 2023.

Nersa determined Eskom’s tariff increase on 14 December and informed the power utility of the decision on 21 December.

Nersa said it had approved revenues of R318 billion for the 2023/24 financial year and R352 billion for the 2024/25 financial year.

Eskom welcomed the decision despite hoping for more.

Nersa highlighted concerns over Eskom’s reliance on emergency generation capacity, specifically the burning of diesel in open-cycle gas turbines, and the power utility’s declining energy availability factor.

“Its coal burn rate is increasing, and yet we have a declining output from those plants,” said Nersa member Nhlanhla Gumede.

Eskom acknowledged the concerns and noted that it had tempered the volume of diesel for OCGT operation to a load factor of 6%.

“It is evident that both Eskom and Nersa are aligned that every effort needs to be made to improve the energy availability factor at Eskom power stations,” it added.

Last year, Eskom received approval for an 18.65% standard price hike and an 18.49% municipal tariff increase.

The price hike announcements received backlash, with the Democratic Alliance (DA) asking the High Court to intervene and stop the price hike.

It described the price hikes as “astronomical” and argued that it would make power unaffordable for many of South Africa’s residents.

“The DA rejects this astronomical increase,” the party said.

The South African Local Government Association (SALGA) was also involved in the legal challenge.

In March, Eskom lodged a last-minute application to reduce the electricity tariff increase for low-income households to 10%.

To compensate, the affordability subsidy increased by 29.53%.

In December 2023, the High Court in Pretoria found in favour of Nersa and dismissed the legal challenge brought by the DA and SALGA.

“All relevant factors have properly and in detail been considered, the conclusions reached were neither arbitrary nor irrational and the issue of cross-subsidisation was considered at the appropriate stage,” the High Court judgement stated.

“The High Court, therefore, found that both the review applications of the DA and SALGA must fail.”

Eskom’s price increases kicking in today are summarised in the table below.

Nersa-approved electricity retail tariff adjustment 2024/25
Customer category Increase
Local authority tariff charges: 1 July 2024 – 30 June 2025 12.72%
Eskom direct customers: 1 April 2024 – 31 March 2025
All tariff charges except the affordability subsidy charge 12.74%
Affordability Subsidy (paid by industrial and urban Eskom customers) 25.24%

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Eskom hikes prices