Eskom asks for price hikes

The National Energy Regulator of South Africa (Nersa) has confirmed that it has received Eskom’s revenue application for the 2025/26, 2026/27, and 2027/28 financial years.

The announcement does not mention the proposed price increases. However, the Daily Maverick recently reported that a draft document showed Eskom seeking a 43.55% hike for municipal customers and 36.15% for direct customers.

Nersa emphasised that this was just a draft application.

Nersa said the application will first need to be assessed for regulatory compliance and will then be processed according to the National Energy Regulator Act.

The application will then be published for stakeholder comment and public consultation. Once deemed compliant, the regulator will announce the date of publication.

“The Energy Regulator is obliged by the Electricity Regulation Act, 2006 (Act No. 4 of 2006) to properly consider Eskom’s application in terms of the laws, policies, regulations, rules and methodologies governing the electricity sector,” Nersa said in its announcement of the application.

These methodologies were recently questioned by Nersa’s head of electricity regulation, Nhlanhla Gumede, who said that the regulator had made a crucial mistake when approving Eskom’s past tariff increases.

Gumede explained that electricity price increases have been regulated according to Eskom’s revenue rather than the cost of supply.

He said this was because of the incorrect interpretation of the Electricity Regulation Act (ERA), which led the regulator to approve Eskom tariff increases of 653% between 2007 and 2022 while inflation only went up by 129%.

Eskom’s price hikes have been approved to regulate the power utility’s revenue in accordance with the 1987 Eskom Act, which Gumede said was annulled by the 2001 Eskom Conversion Act and the 2006 ERA.

“The objective of the ERA is to balance the interests of Eskom, consumers and the supply industry,” says Gumede.

Therefore, Nersa is supposed to regulate certain Eskom activities such as trading, transmission, distribution, and generation rather than Eskom’s revenue, which Gumede believes the regulator has not been doing.

Minister of Electricity and Energy Kgosientsho Ramokgopa believes that Nersa cannot regulate tariff-related issues due to the increasing complexity caused by the liberalisation of the electricity market.

Therefore, Ramokgopa said an urgent review of Nersa’s methodology is needed, which he believes will improve its ability to address affordability and efficiency.