The National Energy Regulator of South Africa’s (Nersa) downward adjustment of the over 36% tariff increase Eskom had applied for to accrue savings for the consumer of about R1 billion in the next three years came as cold comfort to business, consumer and civic organisations who felt the power utility had been allowed to squeeze them out of pocket.
In presenting the tariffs, Nersa Commissioner Thembani Bukula on Thursday said the decision was not taken lightly as Nersa recognised the challenges consumers faced and the importance of ensuring that electricity remained affordable, while securing Eskom’s financial sustainability.
Nersa granted Eskom tariffs increases, which amount to R384.6bn, translating to a percentage increase of 12.74% in the 2025/26 financial year.
For the 2026/27 financial year, Nersa approved revenues of R409.5bn, translating to a percentage increase of 5.36% and for the 2027/28 financial year, the approved revenues of R436.9bn, translating to a percentage increase of 6.19%.
“We also believe that with the 12.74% it will go a long way in balancing the interests of the consumer who are facing affordability issues but also at the same time, with the returns that we have allowed Eskom, to recover through the tariffs, we have done an exercise that gives us comfort that Eskom will be in a position to be sustainable financially and also be able to service its debt,” said acting full-time member for electricity, Nomfundo Maseti.
Industrial Gas Users Association of Southern Africa (IGUA-SA) CEO, Jaco Human, said Eskom’s escalating electricity tariffs were accelerating the shift towards self-generation, forcing businesses to seek more cost-effective energy solutions such as gas and renewables, leading to the imminent establishment of a gas-aggregator company to ensure a reliable supply, safeguard jobs, and mitigate the impact of rising electricity costs on the economy.
“Each increase strengthens the economic case for alternative power, further driving demand for gas—just as South Africa approaches a looming gas supply cliff in 2028,” Human said.
“However, the absence of critical gas infrastructure limits industry’s ability to improve efficiency and competitiveness, exacerbating the economic strain and putting South African businesses at a growing global disadvantage.”
Happy Nkambule, director of energy and environment for Business Unity South Africa (BUSA), said the decision by Nersa to award a 12.7% tariff increase versus what they had applied for was a major decision.
“We have to take it in the context that regulator had to balance Eskom’s interest on one side and ensure that price stability within the electricity-supply industry is maintained or at least achievable,” she said.
“It is not a decision we wanted as BUSA because our submission was way lower than that and also we wanted to have specific focus on some of the operations concerns that have arisen within Eskom, including some of the governance concerns delayed over the years and how they play a role in the position that Eskom finds itself in.”
SolarAfrica CEO, David McDonald, said it has been Eskom’s modus operandi over the past few years to request inflated price hikes to land on a more realistic but still above inflationary increase.
McDonald said it was therefore unsurprising that the escalation was still in the double digits, albeit around a third of what the power utility initially asked for.
“However, it’s still a hefty price hike. To provide context on what this increase will mean for businesses, a 1MVA user’s annual electricity spend will increase by around R2.3 million,” he said.
“If you look at a sector where workers typically earn around R50 an hour, this figure could be equated to around 22 permanent jobs. The fact remains that we are still likely to see above-inflationary increases in the years to come. If not, it will result in double-digit escalation in 2028/29 to compensate for lower increases in preceding years.”
BUSINESS REPORT