South African electricity consumers are bracing for steeper tariff increases after the National Energy Regulator of South Africa (Nersa) reached a controversial R54-billion settlement with Eskom to correct what it described as “errors” in its regulatory calculations.
The settlement, concluded on 30 July behind closed doors, will see electricity tariffs rise by 8.76% in April 2026 instead of the previously approved 5.36%, and by 8.83% instead of 6.19% in 2027/28. The increases represent additional hikes of 3.4% and 2.64% respectively, placing further strain on households and businesses already grappling with high energy costs.
The dispute arose from Eskom’s legal challenge to Nersa’s sixth multiyear price determination (MYPD6) revenue decision in July. The power utility argued that calculation errors had left it with a revenue shortfall of R107-billion, particularly relating to how the regulator calculated the regulatory asset base value for the generation business.
Nersa’s own review identified significant errors, including miscalculations of depreciation amounts that resulted in a R14.5-billion shortfall. An additional error related to an asset transferred for commercial operation further affected the 2026/27 and 2027/28 financial years.
“After rectifying these errors, Nersa concluded that Eskom was entitled to an additional R54-billion over the three-year MYPD6 period,” the regulator stated.
The settlement amount will be recovered in phases, with R12-billion to be collected during the 2026/27 financial year and R23-billion in 2027/28. The remaining balance will be addressed in the next MYPD determination cycle.
The Democratic Alliance has strongly condemned the settlement and called for urgent parliamentary intervention. DA Spokesperson for Electricity and Energy Kevin Mileham MP described the situation as “unacceptable” and has written to the Portfolio Committee on Electricity and Energy requesting an urgent review.
“This so-called ‘mistake’ means that South Africans, struggling under the weight of high electricity costs and a fragile economy, will now face additional tariff hikes,” Mileham said. “Businesses, municipalities, and households will once again be forced to pay for the incompetence of the regulator and the inefficiency of Eskom.”
The DA has raised serious concerns about the lack of transparency in the settlement process, noting that discussions were removed from a public Nersa electricity sub-committee meeting and conducted behind closed doors – contrary to the regulator’s typical practice of holding open meetings.
The settlement has drawn criticism for bypassing public participation processes. According to reports, the settlement discussion was initially on the agenda of a public Nersa meeting but was subsequently moved to a closed session, raising questions about transparency in regulatory decision-making.
Nersa’s fulltime regulator member for electricity regulation, Nomfundo Maseti, defended the agreement, stating: “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.”
This settlement continues a pattern of successful legal challenges by Eskom against Nersa decisions. The power utility previously won a court case over Nersa’s illegal decision to deduct a R69-billion government equity injection from its allowable revenue for the 2020-2022 financial years.
The DA has called for the implementation of a modernised National Electricity Pricing Policy to address what it describes as “opaque, inconsistent” tariff determinations that leave consumers bearing the cost of regulatory failures.
“We cannot allow South Africans to be punished for regulatory incompetence,” Mileham emphasized, pledging continued opposition to unfair electricity pricing.
The additional tariff increases come at a time when South African consumers and businesses are already under significant economic pressure. The settlement effectively means that calculation errors by the regulator will translate directly into higher electricity bills for millions of South Africans.
The phased implementation of the settlement over multiple years suggests that the impact of these regulatory errors will be felt by consumers well beyond the current MYPD6 period, raising questions about the long-term sustainability of South Africa’s electricity pricing framework.
ALSO READ: Municipal body slams energy regulator over electricity trading licences
You must be logged in to post a comment.