National Energy Regulator of South Africa (Nersa)
By Nkosana Khumalo
The National Energy Regulator of South Africa (Nersa) has approved a 12.7% increase in electricity tariffs for Eskom, effective from 1 April 2025. This decision, announced on Thursday, also includes tariff hikes of 5.36% for 2026 and 6.19% for 2027. While these increases are significantly lower than Eskom’s initial request of a 36% hike for 2025, they still surpass the current inflation rate of 3%. 
Eskom’s Financial Outlook
Despite receiving lower-than-requested tariff increases, Eskom anticipates posting its first annual profit in eight years, attributing this positive outlook to improved operations and a state relief package. For the six months ending 30 September 2024, the utility reported a 15.8% year-on-year revenue increase to R183.7 billion, with a profit after tax of R17.8 billion. 
Public Backlash and Political Opposition
The approved tariff hikes have sparked significant public backlash, with concerns about affordability and the potential impact on the cost of living. The Democratic Alliance (DA) has firmly rejected Nersa’s decision, highlighting that the increase is three times the national inflation rate and will exert additional pressure on the prices of goods and services. The DA has been actively opposing these hikes, launching a national petition that has garnered over 130,000 signatures and participating in public hearings across all provinces. 
Government Intervention and Future Outlook
Energy Minister Kgosientsho Ramokgopa has expressed concerns about the tariff hikes and has promised government intervention. Proposed measures include expanding the Free Basic Electricity (FBE) policy to increase free usage from 50 kWh to between 150 and 200 kWh for lower-income households. Additionally, improving Eskom’s financial standing, particularly through a R250 billion government aid package to manage its debt, is expected to enhance the utility’s credit rating and facilitate easier access to financing. Lower financing costs could help contain Eskom’s cost-reflective tariff, ensuring prices remain within the affordability range for end customers.
Challenges Ahead
Despite these interventions, significant challenges remain. Municipal debt, resulting from municipalities failing to pay for the electricity they use, continues to be a pressing issue. Eskom has warned that if this debt is not addressed, the financial burden will increasingly fall on paying customers. As of December 2024, municipal debt was projected to approach R110 billion by 2025.
The Auditor General has also cautioned that Eskom’s strategy of raising prices to cover revenue shortfalls may not yield the expected results, as higher prices could drive electricity users toward illicit means of obtaining power. Minister Ramokgopa has warned that unchecked tariff hikes could lead to social unrest.
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