Electricity Prices in South Africa Are Set To Rise By Nearly 13%
Feb 05, 2025
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The Energy Regulatory Board of the South African National Energy Regulator (Nersa) has approved Eskom's application for a 12.74% increase in electricity prices, according to South African media reports. The committee also approved Eskom's tariff increases of 5.36% and 6.19% for fiscal years 2026/27 and 2027/28, respectively. The decision is a reduction from the 11.8% and 9.1% increases requested by Eskom in its sixth Multi-year Tariff Determination (MYPD6) application, respectively. Direct customer tariffs will come into effect on April 1, 2025, while municipal tariffs will come into effect on July 1, 2025.
The electricity price increase for 2025/26 is well below the 36.15 per cent requested by Eskom, but still higher than the inflation-linked increases requested by many stakeholders at public hearings in November and December. Consumer inflation was 3 percent in December, compared with an average of 4.4 percent for the year, down from an average of 6 percent in 2023. Nersa is also under political pressure to rein in electricity price increases after Kgosientsho Ramokgopa, South Africa's Minister of Electricity and Energy, said Eskom's 36.15% demand was unsustainable.
In a statement, Minister Ramokgopa welcomed the decision, while acknowledging that it would put pressure on Eskom. He said the government remained committed to working with Eskom to drive greater efficiency gains. However, Ramokgopa believes that the approved tariff adjustments take into account the need to ease inflationary pressures on communities and businesses. The government will introduce other measures to support poor consumers and small businesses, but did not provide details.
Thembani Bukula, chairman of Nersa's Board of directors, described the complexity of the decision-making process as a "delicate balancing act" that takes into account the needs of all stakeholders. He said Nersa needed to ensure Eskom was sustainable in both the short and long term. At the same time, ensure that the electricity service provided by Eskom is reasonably priced. "It's not easy. Because inevitably, it is influenced not only by our methods and rules, but also by the larger economic environment at home and abroad. We are still guided and bound by national policies and legislation."
In 2024, Eskom applied to Nersa for an increase of 36% in 2025/26, 11.81% in 2026/27 and 9.1% in 2027/28. The proposal sparked an outcry from the public and businesses, with many arguing that the increase was unaffordable.
In this regard, Bukula stressed that the regulator has taken extensive measures to ensure that the public participation views of all stakeholders are taken into account. The regulator held stakeholder meetings and public hearings and accepted written comments. Household users have stressed that if these prices are approved, they will have to choose between buying food and buying electricity. On the other hand, businesses have made it clear that if these increases are approved, many of them will be forced to shut down their operations.
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