- Minister Kgosientsho Ramokgopa has pledged to intervene in Eskom’s proposed tariff hikes, but experts warn that political interference could lead to legal challenges against Nersa.
- Eskom is seeking a staggering 36.15% tariff increase for 2025, continuing a trend of significant price hikes that have far outpaced South Africa’s inflation since 2007.
A tariff expert has cautioned that South Africa’s Electricity and Energy Minister, Kgosientsho Ramokgopa, faces significant challenges in curbing electricity tariff hikes, and his assurances may invite legal scrutiny of the National Energy Regulator of South Africa (Nersa).
Recently, Ramokgopa announced the government’s intention to intervene to keep electricity tariffs low ahead of Nersa’s decision regarding Eskom’s multi-year price determination (MYPD) tariff application for the next three years.
Currently, Nersa is soliciting public feedback on Eskom’s request to increase tariffs for direct customers by 36.15% starting in April 2025. Additionally, Eskom has proposed subsequent hikes of 11.8% from April 2026 and 9.10% from April 2027.
These increases come from ongoing, substantial tariff hikes that have consistently outpaced South Africa’s inflation since 2007, when Eskom first implemented load-shedding.
Ramokgopa expressed confidence that the actual increase for next year would be far less than the 36.15% sought by Eskom, yet he did not specify how the government intends to achieve this reduction. Shortly after his initial remarks at the Windaba Conference in Cape Town, he argued that any increase exceeding 20% would be unsustainable for consumers.
However, Deon Conradie, a part-time lecturer at Wits Business School specialising in tariffs, warned that political interference in tariff-setting could lead to complications for Nersa. He noted that the courts have consistently reinforced Nersa’s role as the primary authority over Eskom’s tariffs.
If the government is perceived to pressure Nersa into deviating from the established tariff approval process, Eskom could potentially challenge any adjustments in court.
The courts previously ruled that a portion of the R445 billion in revenue Eskom sought for the 2025 financial year—approximately R15 billion—was collectable, despite Nersa’s earlier rejection. The government’s direct control over tariffs is mainly limited to the environmental levy and coal tax, which contribute roughly three percentage points to Eskom’s proposed tariff hike for 2024/2025.
Historically, Nersa has tended to approve lower increases than those requested by Eskom under the MYPD framework. Despite these reductions, electricity tariffs have soared by about 850% since 2007, equating to a compounded annual growth rate of 14.16%, significantly outpacing inflation during the same timeframe.