A deal struck between Eskom and the Energy Regulator of South Africa (Nersa) that will see electricity prices further increase has sparked outrage amid concerns that it could hinder access to electricity for struggling consumers.

Labour unions, civic associations, and ratepayers have expressed their discontent with the development, as they believe that electricity is already out of reach for millions of South Africans due to the high prices.

Nersa has been forced to adjust the tariff increases following an error in calculation. The correction of this error means another 3% in tariff increases will be imposed from the next financial year.

In a statement on the matter, Nersa explained how the settlement agreement with Eskom on the Sixth Multi-Year Price Determination (MYPD6) revenue decision came about. It said on January 30, it made decisions on Eskom’s allowable revenue application where it:

• Approved revenues of R384.6bn for the 2025/26 financial year, which translates to a percentage increase of 12.74%.
• Approved revenues of R409.5bn for the 2026/27 financial year, which translates to a percentage increase of 5.36%.
• Approved revenues of R436.8bn for the 2027/28 financial year, translating to a percentage increase of 6.1%.

Nersa explained that Eskom lodged a judicial review of the decision under section 10(3) of the National Energy Regulator Act of 2004. Eskom sought to set aside the Energy Regulator’s decision, citing a revenue shortfall of R107 billion, which is the difference between what Eskom applied for and what the Energy Regulator approved.

Eskom challenged the Energy Regulator’s decision only in respect of a revenue shortfall that occurred in the generation business due to a data input error, which mainly affected depreciation and the Regulatory Asset Base (RAB) value for the generation business. Nersa said the relief Eskom sought through the judicial review was assessed to evaluate the validity of the claims and to determine whether it could mount a sustainable opposition to the grounds of the review application.

“Following an assessment of Eskom’s review application, Nersa identified errors that resulted in underestimation in certain components of Eskom’s application, specifically an error on the depreciation amount. Consequently, this resulted in a shortfall. “After rectifying these errors, Nersa concluded that Eskom was entitled to an additional R54 billion over the three-year MYPD6 period, an amount substantially lower than Eskom’s original claim of R107 billion. The parties reached a settlement of R54 billion on July 30,” Nersa said.

It stated that the disbursement of this R54 billion settlement amount will be phased as follows:

• R12bn will be recovered during the 2026/27 financial year.
• R23bn will be recovered during the 2027/28 financial year.
• The balance will be addressed in the next MYPD determination cycle.

“There will be no additional price increase for the current financial year (2025/26 FY). However, the settlement agreement will have the following estimated price impact for the 2026/27 and 2027/28 financial years:

• For the 2026/27 FY, the additional increase will be 3.4%, resulting in a price increase of 8.76%.
• For the 2027/28 FY, the additional increase will be 2.64%, resulting in a price increase of 8.83%.”

“This settlement agreement represents a fair and balanced resolution. It safeguards the interests of consumers while addressing Eskom’s legitimate revenue requirements to ensure operational sustainability – both achieved by the pragmatic settlement agreement,” Nersa stated.

However, the development was met with outrage from ratepayers. Anthony Waldhausen of the Msunduzi Association of Residents, Ratepayers, and Civics (MARRC) said, “This blunder by Nersa shows their incompetence and unprofessionalism. It also shows Eskom’s inefficiency as well.”

“Residents are reeling from every other increase and now have to pay extra for electricity, which many residents can’t afford. Residents have to suffer due to both Nersa and Eskom’s incompetence,” he said. The SA Local Government Association (SALGA) said consumers are already grappling with soaring food inflation, rising fuel prices, and escalating living costs.

“For municipalities, the fiscal risks are severe. Electricity is not only a basic service but also a key revenue stream that supports the cross-subsidisation of other municipal services. Steeper tariffs often lead to reduced payment compliance, illegal connections, and heightened community dissatisfaction, undermining service delivery and weakening municipal finances,” said SALGA president, councillor Bheke Stofile.

South African Federation of Trade Unions (Saftu) general secretary Zwelinzima Vavi said, in a TV news channel interview, that the country is now faced with a situation where electricity is unaffordable, not only to consumers but to the economy as a whole.

He said the consequences of the previous increases were already dire, pointing out that more and more women are finding themselves having to go to the forest to fetch wood (for fire and cooking), thereby exposing themselves to danger. “It has become a luxury to have warm water in your house; we’re going back to warming water outside on the fire, which means we are reversing all of the developmental gains achieved in the past 30 years.”

THE MERCURY

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