R722 electricity price pain for South Africa

South African households will pay as much as R722 more per month on their electricity bills from 1 April 2025 if the government approves a value-added tax (VAT) increase to 15.5% in addition to Eskom’s tariff increase.

Finance minister Enoch Godongwana was recently blocked from delivering his budget speech when cabinet ministers in President Cyril Ramaphosa’s Government of National Unity learned that he would propose hiking VAT to 17%.

Sunday Times recently reported that Ramaphosa had tabled a compromise to hike VAT by between 0.5 and 1 percentage point.

MyBroadband recalculated what the impact of Eskom’s approved electricity price increases would be when compounded with the minimum proposed VAT hike.

The National Energy Regulator of South Africa (Nersa) recently reduced Eskom to size with its decision regarding the power utility’s tariff adjustments for the next three financial years.

Eskom had applied for a 36.15% increase in 2025/26. However, the energy regulator only approved an adjustment of 12.7% for the financial year.

This change alone would increase South African electricity bills by as much as R692 per month, depending on how much energy they consume monthly.

However, finance minister Enoch Godongwana recently planned to propose a two percentage point increase to the country’s VAT rate.

This would result in South Africans paying even more for electricity as tariffs are subject to VAT.

It should be noted that Godongwana’s Budget Speech wasn’t approved, and the National Treasury postponed it as the Cabinet was locked in discussions about the proposed tax change.

National Speaker Thoko Didiza adjourned the event, saying the Cabinet couldn’t agree on a budget.

“We have decided to adjourn proceedings for a date to be determined by the programming committee,” said Didiza.

“While today we have gathered here to have the Minister of Finance presenting the budget, there has not been agreement in terms of parties in the executive to find one another in proposals of the budget.”

Postponing the event has allowed the Cabinet more time to reexamine the budget before it is presented in March.

President Cyril Ramaphosa recently tabled a VAT increase of between 0.5 and 1 percentage point as a proposed compromise before Cabinet.

If approved, the VAT increase will further increase the amount households pay for electricity, which is already due to increase by 12.7%.

Eskom had applied for tariff adjustments of 36.15% for 2025/26, 11.81% for 2026/27, and 9.10% for 2027/28.

However, Nersa approved adjustments of just 12.7% for 2025/26, 5.36% for 2026/27, and 6.19% for 2027/28.

The energy watchdog said the increases would enable Eskom to collect revenues of R384 billion in 2025/26, R409 billion in 2026/27, and R435 billion in 2027/28.

South Africans could pay R172 to R722 more per month

MyBroadband determined how much the combined Eskom and VAT increases would impact typical monthly household electricity bills.

We compared 2024/25 pricing for households consuming 450kWh, 600kWh, 900kWh, and 1,200kWh monthly to what they would pay with Eskom’s approved tariff adjustments and if South Africa increases VAT to 15.5%.

Households on Eskom’s Homepower 1, 2, 3, and 4 tariff plans currently pay the same rate of R2.82 per unit, including VAT. With the tariff adjustments and 15.5% VAT, this figure would increase to R3.20 per unit.

Households currently pay around R1,269 per month if they consume 450kWh monthly, which would increase by nearly R172 per month from 1 April 2025.

Households consuming 600kWh per month currently pay R1,692 per kWh, and with the tariff and VAT-adjusted figure of R3.20 per kWh, their monthly bills will increase by nearly R230.

The Homepower tariffs increase substantially for households consuming more than 600kWh per month while also introducing variance between the different Homepower tariffs.

Customers consuming more than 600kWh monthly pay R4.45 per kWh on Homepower 1, R4.35 per kWh on Homepower 2 and 3, and R4.54 per kWh on Homepower 4.

If South Africa increases VAT to 15.5%, these consumers will pay R5.05 per kWh on Homepower 1, R4.92 per kWh on Homepower 2 and 3, and R5.14 per kWh on Homepower 4 from 1 April 2025.

Based on this, households consuming 900kWh per month on average will pay around R531 more per month if they’re on Homepower 1, R513 more if they’re on Homepower 2 or 3, and R541 more if they’re on Homepower 4.

At the higher end of the scale, Eskom direct households consuming an average of 1,200kWh per month would pay R709 more on the Homepower 1 tariff, R684 more on Homepower 2 or 3, and R722 more on Homepower 4.

The table below compares the monthly energy costs for households that consume 450kWh, 600kWh, 900kWh, and 1,200kWh monthly in 2024/25 to what they will pay from 1 April 2025 if government approves an increase to 15.5% VAT.

We combined the Homepower 2 and 3 tariffs as they are similar.