Parly committee criticises Nersa over electricity tariff increase

Parliament’s Portfolio Committee on Electricity and Energy has criticised the National Energy Regulator of South Africa (Nersa) for approving Eskom’s application for an increase in electricity tariffs.

Last year, Nersa approved the power utility’s 12,7% tariff increase application starting from the first of next month.

Members of the committee have requested Nersa to provide the rationale behind its decision.

Nersa told the committee that the approval of the tariff increase has conditions, which include addressing unplanned power outages.

Executive Manager at Nersa, Nomfundo Maseti, says, “We insisted that Eskom must reduce these unplanned outages. And we believe that if they were to do maintenance in a proper way, they can solve their maintenance regime. And we have given them money to do so. Therefore, they should be in a position to reduce the unplanned outages. We have put the bench mark for them as to where they need to be in terms of unplanned outages. And the unplanned outages are the ones that are causing the load shedding. So, if they can focus on that and perform appropriately, they should be able to reduce on that.”

Maseti says Nersa has to make adjustments based on the costs and debt Eskom has incurred.

“That shortfall made up 5,7%. It was not insignificant … and the stakeholders came forward to say that it is a concern and may be it will require some policy interventions as to how do we look into this going forward, because it may not be sustainable that consumers will have to come in and pay for that,” says Maseti.

But this explanation did not sit well with the members of the committee.

ANC member Fasiha Hassan and MK MP Adil Nchabeleng, says, “For example, the City of Cape Town charges the most exorbitant electricity costs in the country. The most expensive. And some of the poorest of the poor in Khayelitsha right now, in Gugulethu, Mannenberg, all sorts of other spaces, there is no relation on that level. When we go to municipalities, our people are paying R4 to R5 a tariff, at municipality levels to buy electricity vouchers. This is the reality on the ground. This is the livid reality. You know I am not going back to the process here.”

Other members were also fuming.

DA MP Kevin Mileham and ACDP MP Wayne Thring added their voices.

Posted on: March 8, 2025

Eskom wants to punish people for using less electricity

Despite sugarcoating by the country’s electricity regulator, Eskom’s recently approved retail tariff plan (RTP) will ultimately punish people who use less grid power, not “enhance” their electricity affordability.

On 22 February, the National Energy Regulator of South Africa (Nersa) announced it had approved Eskom’s RTP 2025 with a few adjustments in the timeframe for implementation.

The RTP includes a plethora of changes in the way that Eskom calculates tariffs.

The biggest change is the introduction of higher fixed charges independent of consumption — including a fixed Generation Capacity Charge (GCC) levied per day and per Eskom point of delivery (POD).

That will result in many households with low to moderate electricity consumption seeing an increase in their bills.

This will be in addition to the increases that will take effect as a result of the above-inflation annual hikes, also approved by Nersa.

The RTP will benefit most average and heavy electricity users, who will be paying less on their bills due to the scrapping of the Incline Block Tariff (IBT) pricing structure in favour of flat tariffs.

In its summary of the impact of the changes on households, Nersa said that the removal of the IBT structure for Homepower and Homelight tariffs simplified the pricing model and will have a “positive impact” on low-consuming customers.

“Transitioning to a single energy rate structure will enhance affordability for many households, promoting a clearer understanding of energy costs,” Nersa said.

It would be hard not to label this interpretation as disingenuous at its best and blatantly misleading at worst. Lower consumption users are precisely the customers who benefited from lower tariffs under the IBT.

The IBT was designed to make tariffs for small households more affordable and to reward responsible power usage while Eskom’s generating fleet was under constraint.

While many people argued this model was backwards compared to other businesses that typically reward buying products in bulk, the reality is that Eskom’s generation can still not keep up with demand.

Considering Eskom is not yet in a position to declare an end to load-shedding, encouraging higher usage seems counterintuitive to helping the fleet recover from years of neglected maintenance and the slow build-up of new generation.

Although it can be argued that a flat tariff eliminates complexity in pricing structures, it also does not “enhance” affordability for lower-consumption users, especially when coupled with increased fixed tariffs.

Eskom’s own RTP submission to Nersa states that removing the IBT and introducing a more “cost-reflective” fixed charge results in lower-consumption customers paying more.

That excludes customers on the Homelight 20A and Homelight 60A tariffs, who will remain exempt from cost-reflective tariffs.

Therefore, the RTP will not reduce or eliminate subsidies; it will simply shift the burden of the subsidies that were historically on the above-average users to below-average users.

The graphs below show how the RTP tariffs would impact bills in the 2024/2025 financial year.

It is important to emphasise that the actual amounts will change as the RTP is only set to take effect from Eskom’s 2025/2026 financial year, starting in April 2025.

Posted on: March 8, 2025