Nersa approves Eskom tariff hikes: what this means for consumers

In a significant move impacting South African electricity consumers, the National Energy Regulator of South Africa (Nersa) has approved new tariff increases for Eskom, following a meeting on March 11.

The decision marks an average increase of 12.74% for Eskom’s direct customers and 11.32% for municipalities, set to reshape the electricity expenditure landscape as the country grapples with energy challenges.

The approved Eskom Retail Tariffs and Structural Adjustment (ERTSA) application will see the standard tariff increase for Eskom customers come into effect on April 1, remaining in place until March 31, 2026.

In contrast, municipal customers will face a slightly lower increase starting on July 1. The differentiation in percentage increases for these customer categories arises from their respective financial years; Eskom’s financial year runs from April to March, while municipalities operate from July to June.

This tariff adjustment is a result of the culmination of the sixth Multi-Year Price Determination (MYPD6) revenue determination process, which mandates that Eskom recover its full allowed revenue within the specified financial year.

The process involved comprehensive stakeholder engagement and consideration of various comments that addressed key issues such as the impact of the approved Retail Tariff Plan (RTP), the necessity for a long-term strategy to tackle cross-subsidies, the different cost structures at play, and Eskom's dominant market position.

As part of this initiative, Nersa has promised to release an in-depth analysis of stakeholder comments, along with a comprehensive Reasons for Decision (RfD) document, which will soon appear on the Nersa website.

While the decision is poised to provide Eskom with the necessary funds for infrastructure and operational costs, it also places a heavier burden on consumers, already grappling with financial strain due to rising costs of living. Opponents of the tariff increase warn that the higher electricity prices may exacerbate existing economic challenges for many households.

As South Africa continues to navigate its energy crisis, the implications of these tariff increases will not only affect electricity bills but potentially influence the broader economy, energy policy, and consumer behaviour in the coming months.

IOL