Eskom’s Proposed Tariff Hikes Threaten Severe Financial Strain for Already Stretched Residents

The National Energy Regulator of South Africa (NERSA) has officially published Eskom’s proposed Retail Tariff Plan for public consultation, revealing sweeping changes to its tariff charges and rates. Eskom claims that the plan is designed to ensure that customers only pay for the costs they incur. However, the reality of these looming price hikes is set to unleash devastating consequences for millions of South Africans. 

It is critical to recall that Eskom has applied for total revenues of R446 billion for the financial year 2026, R495 billion for 2027, and a staggering R537 billion for 2028.

These applications translate to a proposed average price increase for direct customers of 36.15% from 1 April 2025 to 31 March 2026, followed by an 11.81% increase from 1 April 2026 to 31 March 2027, and a further 9.10% hike from 1 April 2027 to 31 March 2028. These figures represent a sharp escalation in costs, poised to strike at the wallets of every South African citizen and business owner. 

In a statement from Eskom, the power utility asserted that the proposed tariff changes are necessary to reflect NERSA-approved costs for generation, transmission, and distribution services while attempting to balance affordability, fairness, and transparency.

“The electricity supply industry is undergoing fundamental changes that will set the course for economic growth and prosperity in the years ahead. It is therefore vital that as many stakeholders as possible engage with NERSA on the proposed changes to support the determination of tariffs that are as fair as possible for all customers,” stated Monde Bala, Eskom Group Executive for Distribution. 

Bala elaborated that the tariff restructuring seeks to address inefficiencies in the current system by avoiding the creation of unintended subsidies and restructuring existing tariffs. He stressed that the restructuring process is distinct from Eskom’s Multi-Year Price Determination (MYPD 6) application for revenue collection between 2025 and 2028. “Eskom will not generate additional revenue from the proposed tariff restructuring but will rebalance the charges while remaining within the 2024/25 costs already approved by NERSA,” Bala concluded. 

This latest application follows similar submissions by Eskom in 2020 and 2022. Except for the introduction of the Homeflex tariff in 2022—a residential tariff that enables grid connection and energy export for solar photovoltaic (PV) customers—these submissions were largely rejected by NERSA. 

Furthermore, NERSA has begun public hearings on Eskom’s latest application, which commenced on 18 November 2024 and will continue until 4 December 2024. Hearings will be held across all nine provinces, with NERSA’s final decision on the proposal expected on 20 December 2024.

In KwaZulu-Natal, the hearings are scheduled for Thursday, 21 November 2024, and Friday, 22 November 2024, from 9 am to 5 pm, at the Transnet National Ports Authority (TNPA), N-Shed Passengers Terminal on Quayside Road in Durban. 

The proposed tariff hikes could have severe implications for Newcastle residents, especially in light of ongoing financial challenges faced by the Newcastle Municipality. Earlier this year, in January 2024, Newcastillian News reported that the Municipality was grappling with significant revenue collection issues. Newcastle West alone owed the Municipality R178,816,647.14, while Newcastle East owed R1,568,960,777.60. 

Moreover, Newcastle Municipal Manager, Zamani Mcineka, has warned that the tariff hike would be catastrophic for local consumers.

“If you look at the tariff hikes over the past three years, the tariffs have risen by approximately 60%, and this is going to impact the Municipality negatively. A lot more people will start looking at illegal connections. Moreover, the collection rate will worsen as families are already facing financial restraints, and the hike will now see them spending more for electricity,” stated Mcineka. 

With the Municipality waiting for NERSA’s decision, Mcineka expressed frustration that public hearings are not being held in Northern KwaZulu-Natal, depriving local residents of an opportunity to voice their concerns.

“It is inefficient of Eskom not to come to this area so local residents could have their say,” Mcineka remarked, adding that he understands why petitions are being launched to oppose the application. 

Building on this, the Democratic Alliance (DA) has spearheaded one such petition to contest Eskom’s proposal. In a scathing statement, the political party declared, “This hike will force millions to make an impossible choice between food and electricity. We refuse to accept a future where electricity is unaffordable for the average household. Adding insult to injury, Eskom has been given a green light to overcharge you next year, to recover revenue shortfalls from this year. NERSA has already approved a 4% increase to enable Eskom to collect an extra R8 billion from consumers to make up for revenue losses.” 

Residents who wish to oppose the proposed hikes are encouraged to sign the DA petition to amplify their voices. To participate in the petition and push back against these developments, click here. 

As the prospect of choosing between electricity and basic necessities looms ever closer, what are your thoughts on the proposed tariff changes? Share your views in the comment section below.