Eskom’s proposed price hikes over the next three years have ignited widespread concern, with City Power warning of potential social unrest if increases are not capped at manageable levels. The utility’s appeal to the National Energy Regulator of South Africa (NERSA) highlights the pressing need for balance between Eskom’s financial recovery and the economic stability of South African households.
Eskom’s Proposed Tariff Increases
Eskom has applied for significant tariff increases as part of its Multi-Year Price Determination (MYPD6) application. If approved, these hikes would result in a cumulative 66% rise in electricity prices by 2027:
- 36.15% increase on April 1, 2025
- 11.91% increase on April 1, 2026
- 9.1% increase on April 1, 2027
These proposed increases have triggered a wave of opposition from municipalities, civil organizations, and consumers. Critics argue that such drastic price hikes are unsustainable and will exacerbate poverty, unemployment, and social unrest.
City Power’s Stance
City Power, the electricity utility of the City of Johannesburg, has strongly recommended that NERSA cap Eskom’s annual tariff increases at 11%. This approach seeks to strike a balance, enabling Eskom to address its financial challenges while alleviating the economic burden on consumers.
In its submissions, City Power emphasized the devastating impact of the proposed hikes:
“The proposed increase, which could reach an alarming 66% cumulative over the application period, will most certainly pose a significant threat to the economic stability and social fabric of the communities we serve.”
City Power noted that the recent 12.75% tariff hike has already strained residents’ finances, with many households on the brink of economic hardship. A further 36.15% increase in 2025 would likely push many South Africans into deeper poverty, creating fertile ground for social unrest.
Operational Inefficiencies at Eskom
City Power’s submission also flagged operational inefficiencies at Eskom, arguing that these inefficiencies contribute to the utility’s financial woes. Among the issues highlighted are:
- Over-reliance on open-cycle gas turbines.
- Delays in the rollout of Independent Power Producers (IPPs).
- Poor management of carbon tax obligations.
City Power urged Eskom to adopt better cost management practices and to ensure that cost-reflective tariffs are not a “moving target” that perpetually burdens consumers.
Balancing Financial Needs and Public Welfare
While acknowledging Eskom’s need for financial recovery, City Power insisted that the national utility must act responsibly. The proposed tariff hikes, according to City Power, fail to consider the economic realities faced by consumers and municipalities.
The utility’s recommendation to cap increases at 11% would still allow Eskom to achieve above-inflation tariff adjustments, providing financial predictability and relief for households.
City Power stated:
“An annual increase of no more than 11% should be aimed for, ensuring that Eskom can sustain itself while acknowledging the financial realities faced by consumers.”
Calls for Accountability and Collaboration
City Power’s submission also called for NERSA and Eskom to collaborate on achieving fair, manageable, and transparent tariff increases. The utility stressed that any adjustments should not only address Eskom’s financial needs but also safeguard the interests of municipalities and the broader public.
It urged Eskom to:
- Improve cost management.
- Reflect all operational inefficiencies in its tariff applications.
- Demonstrate accountability in addressing its financial challenges.
Implications of Excessive Increases
If Eskom’s proposed hikes are implemented, the ripple effects on South African households and the economy could be severe. Increased electricity tariffs would drive up the cost of living, placing additional pressure on already overstretched budgets.
Social unrest, as warned by City Power, may become inevitable as more households struggle to afford basic utilities.
City Power’s call for NERSA to cap Eskom’s price hikes at 11% underscores the urgency of prioritizing consumer welfare while addressing Eskom’s financial challenges. Striking a balance between these competing interests is critical to ensuring economic stability and social harmony in South Africa.
As the public consultation process continues, all eyes are on NERSA to make a decision that considers the long-term impact on South Africa’s economy and its citizens.
