Nersa decision on Eskom tariff application expected soon. Picture: Henk Kruger/Independent Newspapers
Energy experts and the Southern African Faith Communities’ Environment Institute (SAFCEI) have called for the National Energy Regulator of South Africa (Nersa) to be wary of the impact of their decision on Eskom’s tariff application.
Nersa is expected to announce their decision on Eskom’s tariff application for the 2025/26 financial year in the coming days.
Professor Vally Padayachee, power and energy expert, and a former executive manager of Eskom, reiterated that Eskom has submitted a tariff application to the regulator for an average increase of a massive 36% to its customers from 1 April 2025.
“Eskom and municipalities make a tariff application each year to Nersa, which they are required to do by law,” he said.
“In their respective applications, Eskom and a municipality are requiring approval from NERSA on an acceptable revenue regime and approval for an average efficient and cost-reflective tariff increase.”
Padayachee said that if Nersa approves such a massive increase, it was going to inter alia have an overall negative impact on the economy, let alone messing up the lives of the people, maybe worse than what load shedding did.
“If Nersa is trying to execute its balancing role as best as it can and does not approve the 36% tariff increase or grants Eskom a low tariff increase, then as an unintended consequence, it may further exacerbate its current dire financial status, especially its debt burden and revenue challenges,” he said.
“This is obviously unsustainable, and Eskom will continue to apply for higher tariff increases the following year to remain sustainable, afloat. In light of the above circumstances, the government can play a role in resolving or harmonising this seemingly potential crisis, no matter whether Nersa approves or significantly decreases Eskom’s tariff application for an average increase of 36%.”
Metros and municipalities still purchase the bulk of their power or electricity from Eskom.
For many municipalities, this bulk power purchase accounts for 75% to 90% of a municipality’s income statement, given Eskom’s rampant electricity increases in recent years.
Padayachee said if Nersa approves a further or additional 43% in a municipality’s cost of sales, then it’s going to also exacerbate the current cash-strapped status of municipalities and may also force many of them into bankruptcy.
“The government will have to come up with an appropriate pricing methodology to satisfy both Eskom, municipalities, and customers,’’ he said.
Ruse Moleshe, managing director of RUBK, an energy and infrastructure consulting and advisory company, on Tuesday said that she expected Nersa to take the impact on consumers into account.
“At the same time, they will diligently look at the application and ensure that they award only costs that are efficiently incurred and disallow those that are not. The tariff granted could still be relatively high but not as high as the current application,” she said.
Meanwhile, SAFCEI called for urgent reforms to the country’s electricity pricing system and also urged Eskom to retain the Inclining Block Tariff (IBT) until an effective subsidy structure was implemented.
“This follows Eskom’s Retail Tariff Plan (RTP) application to the Nersa. Eskom’s application for a 36% tariff increase for 2025/26 will devastate low-income households, it said.
“We stress that fixed charges should reflect the level of service use rather than a one-size-fits-all approach. We emphasise that any tariff restructuring must support the country’s transition to a sustainable and secure energy future.”
BUSINESS REPORT