Balancing Eskom’s Sustainability with Affordability Amid Public Backlash
The National Energy Regulator of South Africa (Nersa) has officially approved a 12.7% electricity tariff hike for Eskom for the 2025/2026 financial year. This decision, announced on Thursday, follows Eskom’s sixth multi-year price determination (MYPD6) revenue application. The approved hike is significantly lower than the 36.15% increase Eskom had initially proposed.
Understanding the Tariff Adjustments
Eskom’s application outlined annual adjustments for three consecutive years. Beyond the approved 12.7% increase for 2025, smaller hikes of 5.36% and 6.19% were approved for 2026 and 2027, respectively. This comes after a 13% tariff hike was implemented in April 2023, further burdening South Africans already grappling with escalating living costs.
During a media briefing, Nersa Chairperson Thembani Bukula revealed Eskom’s revenue requests amounted to R446 billion for 2025, R495 billion for 2026, and R537 billion for 2027. However, Nersa revised these figures, reducing the allowable revenue to R384 billion, R409 billion, and R435 billion for the respective years.
Public Concerns and Controversy
The decision has provoked widespread public and political concern. The Democratic Alliance (DA) has strongly opposed the tariff hikes, launching a petition to reject Eskom’s initial request. Households and businesses alike voiced their frustrations during public hearings, citing potential sacrifices between purchasing food and electricity or, in the case of businesses, facing closures due to unsustainable operating costs.
Stakeholders further highlighted critical issues, including:
- Municipal debt owed to Eskom
- The rising costs of coal
- Eskom’s reliance on costly diesel-powered open-cycle gas turbines
- Broader economic challenges, including job shortages
Nersa’s Balancing Act
Bukula emphasized the challenge of balancing Eskom’s financial sustainability with the affordability of electricity for South Africans.
“We are required to ensure that Eskom is sustainable in the short and long term. At the same time, we must ensure the affordability of electricity services,” Bukula stated, acknowledging the complexity of the decision amid local and international economic pressures.
Looking Ahead
While the 12.7% hike is considerably lower than Eskom’s initial request, it remains a burden for many South African households and businesses. The ongoing struggle to balance rising electricity tariffs with economic challenges underscores the pressing need for long-term energy solutions and fiscal reforms within Eskom.
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