South Africa could see Eskom ask the National Energy Regulator of South Africa (Nersa) for an electricity hike of 36.15% and 44% for 2025, which could translate to a hike of up to R2,500 a month—depending on consumption. A household with average consumption (900kWh) could see their bills hiked up to an additional R1,600 per month.

A recent report by Daily Maverick revealed that Eskom has made a substantial request for an electricity tariff increase. The state-owned power utility is seeking a 36.15% hike for the customers it directly supplies and charges, and a higher 43.55% increase for those customers supplied by local power utilities. The proposed electricity price increases were detailed in a confidential draft document dated May 2024, outlining Eskom’s financial plans for the years 2026 to 2028. The request includes specific tariff increase percentages for non-municipal and municipal customers over the mentioned financial years.

If approved, these increases would take effect on 1 July 2025. The draft document is the initial step in the application process. Energy analyst Mohamed Madhi told eNCA that he is not surprised by these numbers, given Eskom’s financial situation and what’s been happening in the market. Despite this, he noted that there is no need to panic just yet, as it is unlikely Eskom will get what it’s asking for—as evidenced in previous years. “If you look back, before the 2023/24 increase, they asked for an increase of 32%, and they got an increase of just over 18%,” said Madhi.

However, he said that, given these proposed increases, it is possible that South Africans will be faced with another double-digit increase for next year, which will likely be in the teens. The increase proposed in the confidential draft document should also not come as a surprise when considering former Eskom CEO Andre de Ruyter’s comments made in December 2023.

According to de Ruyter, government bailouts are essential for Eskom’s recovery, but they alone aren’t enough to keep the power utility afloat. He said Eskom must obtain cost-reflective tariffs from Nersa to survive, and the regulator has often granted Eskom less than what it has asked for. “If electricity tariffs don’t match the cost of electricity generation, Eskom will be back at the National Treasury’s door begging for more money,” he said.

Estimated increases

The average middle-class household of about four people will use approximately 900 units (900kWh) per month. However, there is a surcharge after the first 600 units; therefore, we estimated the cost increase for households who consume between 600kWh and 1,500kWh. The table below shows an estimate of how Eskom’s electricity tariff changes could impact direct Homepower users with varying consumption levels starting in July 2025, assuming the worst case where Eskom is granted what it is asking for (36.15%). Using Eskom’s tariff booklet for 2024, direct households could pay between R692 and R2,535 extra every month next year. This increase would be more substantial for customers supplied by local power utilities.

It must be noted that the proposed electricity price hikes still require extensive public comment and hearing processes. The table only illustrates the possible impact the tariff increase could have on your bills.

Source: BusinessTech – 25 June 2024