KEY POINTS
- Eskom seeks tariff hikes of 36.15 percent, 11.91 percent, and 9.1 percent over three years.
- Public hearings highlight concerns over affordability and operational inefficiencies.
- Negotiated pricing agreements for energy-intensive companies face criticism.
As the National Energy Regulator of South Africa (Nersa) launched its public hearings on Eskom’s revenue application, debates over affordability and operational inefficiencies dominated discussions. The hearings, held in Cape Town, aim to address Eskom’s proposal for substantial tariff increases in the coming years.
Tariff hike details spark public concern
Eskom is requesting revenue increases to R446 billion in 2025/26, R495 billion in 2026/27, and R536 billion in 2027/28.
If approved, this would translate to tariff hikes of 36.15 percent, 11.91 percent, and 9.1 percent for the three consecutive years, respectively. For consumers, this means electricity costs could rise from 195.74 cents per kilowatt-hour to 266.78 cents in 2025.
Eskom CFO Calib Cassim outlined the primary drivers of the proposed hikes, including soaring energy costs of R128 billion for 2025, with coal accounting for R93.6 billion. Other factors include operating expenses of R93.3 billion, arrear debt recovery from municipalities amounting to R8.9 billion, and depreciation costs of R66.9 billion.
Additionally, the controversial negotiated pricing agreements (NPAs) with energy-intensive companies like smelters account for 5.7 percent of the proposed increase.
According to Engineeringnews, the NPAs aim to provide discounted tariffs to businesses meeting specific energy consumption thresholds but have raised concerns over burdening standard tariff customers.
Public reactions and political intervention
The public hearings showcased widespread dissatisfaction with the proposed increases. Consumer advocates highlighted that cumulative tariff hikes since 2009 have exceeded 470 percent, placing an unsustainable burden on households and businesses.
Political leaders also weighed in, with the Democratic Alliance staging a protest outside the venue. Western Cape Premier Alan Winde denounced the hikes as “outrageous and unacceptable,” emphasizing the dire impact on citizens already struggling with high living costs.
Industry stakeholders called for a balanced approach to cost-reflective tariffs. The South African Local Government Association urged a government-industry dialogue to manage the transition without destabilizing the economy.
Others, such as Swartland Municipality’s Thys Möller, criticized the allocation of NPA costs to standard customers, arguing it exacerbates inequality and unemployment.
Calls for systemic energy reform
Environmental and faith-based groups argued for a comprehensive review of energy pricing policies. Green Connections described the current pricing model as “unsustainable and broken,” advocating for a restructuring of the entire electricity supply system.
Eskom’s operational inefficiencies also came under scrutiny. Nersa panel members questioned the utility’s ability to achieve its energy availability target of 70 percent by March, a reduction from the previously announced 75 percent.
Concerns were raised about Eskom’s reliance on heavy-fuel oil and its forecast of declining sales volumes, which could further strain affordability.
The hearings underscored the urgent need for innovative solutions to South Africa’s energy crisis. As debates continue, the outcome of these deliberations could significantly shape the country’s energy landscape.
