Electricity tariffs for the next two years have been hiked after the National Energy Regulator for South Africa (NERSA) said it found errors in its price determination announced in January.
For the first time in many years, tariff increases for 2026/27 and 2027/28 were set to increase moderately at 5.4% and 6.2%. Following the revision to the price determination, the tariff increase for the next two years will be 8.8% each year, almost three times higher than the anticipated consumer inflation rate.
NERSA determines the tariff increase based on Eskom’s application, which is evaluated using the multi-year price determination methodology. The methodology provides a formula that considers Eskom’s costs and allows for depreciation and a return of assets.
The adjustment to the tariffs, which was announced by NERSA on Tuesday evening, comes after Eskom launched a judicial review to challenge the price determination made in January. The two parties then decided to settle the matter through negotiations.
NERSA pointed out that Eskom’s original claim had been for R107 billion. The additional R54 billion from customers will be collected in a phased manner, over the next two years, resulting in an 8.8% increase (round off) each year.
Under normal circumstances, NERSA must allow for public consultation when it makes a price determination for Eskom or adjusts allowable income retrospectively to add to future years. However, as the matter was settled in negotiations, no public hearings were held in this case.
“This settlement agreement represents a fair and balanced resolution. It safeguards the interests of South African electricity consumers while addressing Eskom’s legitimate revenue requirements to ensure operational sustainability, both achieved by the pragmatic settlement agreement. The energy regulator will continue to apply rigorous regulatory oversight to guarantee that all revenue allowances are efficiently utilised for the benefit of the electricity supply industry and the economy at large” said Nomfundo Maseti, NERSA full time regulator member responsible for electricity regulation.
The article was first published by News24 business: Electricity shock: Steeper price hikes announced after regulator’s errors