South Africa's Electricity Tariffs Proposed to Be Raised by 10.5%

South Africa may see another significant increase in electricity prices, with a proposed 10.5% hike causing budget anxiety for millions of households and enterprises across the nation. This adjustment stems from Eskom's request for an additional 76 billion rand in revenue, nearly double the originally planned increase for 2026. The National Energy Regulator of South Africa (Nersa) is currently reviewing the proposal. If approved, the new tariffs will be implemented in phases for different user groups. Behind this price adjustment lies deeper issues, including regulatory failures and poor cost control in South Africa's energy sector.

According to Nersa's review plan, if Eskom's revenue application is approved, users who purchase electricity directly from Eskom will face the new tariffs starting April 1, 2026, while those supplied through municipal electricity companies will see adjustments from July 1, 2026. For South Africans already struggling with high living costs, this price hike adds further strain: average households could see monthly electricity bills rise by hundreds of rand, and low-income families may face greater challenges in affording basic electricity. Small and micro enterprises, such as shops and restaurants, will experience higher operating costs, potentially forcing some to raise prices or cut expenses. Although large energy-intensive industrial enterprises will also encounter increased electricity costs, some benefit from special pricing and tariff exemptions. The resulting revenue shortfall is often passed on to ordinary households and small-to-medium enterprises, raising widespread concerns about the fairness of this uneven cost distribution.

The core reason for the proposed sharp tariff increase is not solely about covering corporate costs. Nersa has admitted to regulatory errors in previous Eskom tariff calculations, including miscalculations in key accounting areas such as asset depreciation and returns. These mistakes have directly inflated Eskom's pricing ceiling, yet consumers are now expected to bear the cost of the regulator's past errors. Additionally, the actual construction costs of several Eskom power plants have far exceeded initial budgets, and the depreciation expenses for these high-cost plants are fully passed on to consumers. This means South Africans are paying for cost overruns from infrastructure projects built years ago. Matthew Cruize, an energy expert at Impower Solar Energy Company, criticized the unfairness, noting that despite over 15 years of electricity pricing experience in South Africa, disputes between regulators and the power company over basic accounting standards like asset depreciation persist. Consumers should not be held financially responsible for poor industry planning and overspending.

Looking at the trend of electricity prices in South Africa, this proposed increase is not an isolated case but a continuation of a long-term upward trajectory. Data show that from 2016 to 2025, the average electricity price for South African households surged from 1.08 rand per kWh to 2.53 rand per kWh, an increase of 134%. In 2023, Nersa approved an 18.65% electricity price hike, and in April 2025, it raised prices by another 12.74%. Notably, while electricity prices continued to rise sharply, Eskom's electricity sales volume declined by 11.5% over the past decade, yet its revenue doubled. This indicates that the company's revenue growth did not stem from improved operational performance but relied entirely on price increases.

The persistent rise in electricity costs has also negatively impacted South Africa's overall economy. Several experts in economics and energy stated that as a fundamental cost of production and daily life, higher electricity prices directly drive up the prices of various goods and services, putting enterprises under pressure and reducing public willingness to spend, thereby hampering national economic growth. Meanwhile, experts pointed out that Nersa, as the regulatory body, has failed to effectively fulfill its core responsibilities—ensuring affordable electricity prices while overseeing Eskom's cost control. Now, the balance between price regulation and corporate oversight has been disrupted. Eskom itself faces fundamental issues such as aging infrastructure, high debt, and past mismanagement, which remain unresolved. Instead, the company continues to pass operational pressures onto consumers through price hikes, forcing South Africans to bear the costs of industry problems they did not create.

Currently, this price adjustment is still in the public consultation phase. Under a court directive, Nersa must fully solicit public opinions before making a final decision. The deadline for submitting comments is January 21, 2026, and the authority is expected to announce the final review result on January 30, deciding whether to approve the full 76 billion rand cost adjustment proposal or modify it. This provides an opportunity for South African citizens and businesses to voice their concerns and opinions regarding the proposed electricity price increase before the deadline.

Industry insiders believe that the proposed 10.5% electricity price hike is far more than just a higher utility bill; it reflects deep-seated issues within South Africa's energy sector. Problems ranging from regulatory miscalculations and poor corporate cost control to inherent systemic flaws urgently need addressing. The outcome of this price adjustment will not only affect the well-being of South African citizens and the operational development of enterprises but also influence public trust in the energy regulatory process. As the public consultation deadline approaches, it remains uncertain whether public outcry will impact the final decision. However, it is certain that debates over South Africa's electricity pricing mechanism and energy sector reform will continue.