The National Energy Regulator of South Africa (NERSA) has officially announced its decision on Eskom’s revenue application, confirming electricity tariff increases for the next three years. The approved increases, though significantly lower than Eskom’s initial requests, are still expected to place a heavy financial burden on consumers and businesses.
According to the announcement:
- Eskom requested a 36.15% tariff increase for 2025/2026, but NERSA approved 12.7%.
- Eskom requested an 11.81% tariff increase for 2026/2027, but NERSA approved 5.36%.
- Eskom requested a 9.1% tariff increase for 2027/2028, but NERSA approved 6.19%.
Industry Response
David McDonald, CEO of SolarAfrica, provided insights on the impact of these increases, stating that while Eskom has historically requested inflated price hikes, the approved increase for 2025/2026 remains high.
“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. It is therefore unsurprising that the escalation granted by NERSA for 2025/2026 is still in the double digits, albeit around a third of what the SOE initially asked for (as we anticipated),” McDonald said.
However, McDonald warns that the price hike will have serious consequences for businesses. “To provide context on what this increase will mean, a 1MVA user’s annual electricity spend will rise by approximately R2.3 million. In an industry where workers typically earn around R50 per hour, this amount could equate to roughly 22 permanent jobs,” he explained.
The Future of Energy Pricing
McDonald predicts that the increases for 2026/2027 and 2027/2028 could face challenges, but above-inflationary price hikes are still likely in the coming years. “If not, we will likely see double-digit escalation in 2028/2029 to compensate for lower increases in preceding years,” he noted.
Despite the rising costs, McDonald does not believe businesses and consumers should entirely move away from Eskom. “Given these latest price increases – and now that renewable alternatives exist – should we all ditch Eskom? The answer is no. The price crisis will only get worse, which is why public-private partnerships are crucial to ensuring an equitable and sustainable energy future,” he emphasized.
Alternatives to Rising Electricity Costs
As businesses brace for higher utility bills, McDonald highlights the importance of considering affordable power alternatives. Solar energy and other renewable solutions can help mitigate the impact of rising costs, ensuring more predictable and sustainable energy expenses.
McDonald is available for further discussions on how these tariff increases will affect businesses and consumers, as well as potential alternative energy solutions to ease the burden of rising electricity costs.
