Eskom Increase Is Three Times That of Inflation

The Organisation Undoing Tax Abuse (OUTA) is somewhat relieved that the Eskom electricity price increases approved by the National Energy Regulator of South Africa (NERSA) are not as high as initially feared. However, the increase of 12.74% from 1 April 2025 (followed by 5.36% in 2026 and 6.19% in 2027), is still three times that of inflation and comes on the back of grossly inflated electricity hikes over the past 15 years, which has made the price of electricity out of touch with the economic realities of South Africans.

“While we expected NERSA to keep to the past traditional minimal reductions and approve an even higher increase, the reality is that this hike is still far too much for consumers and businesses already struggling to keep the lights on,” says OUTA CEO Wayne Duvenage.

Electricity prices have more than doubled since 2020

NERSA’s approval means that the average standard tariff for Eskom customers will rise from 195.95 cents per kilowatt hour (c/kWh) to 220.92c/kWh on 1 April, an increase of 12.74%. By 2027, this figure will further escalate to 247.16c/kWh. Since April 2020, the average price of electricity has doubled from 110.93c/kWh, placing a massive burden on already stretched consumers and businesses.

This is the average standard tariff. Eskom has also submitted its retail tariff plan to NERSA, which details the different tariffs, and is required to ensure that Eskom’s overall revenue does not exceed the amount approved by NERSA. Thus many tariffs will be higher than that average. The price which Eskom will charge municipalities for bulk supply is in that tariff plan, so must still be set, and the municipalities must then set their own tariffs – also to be approved by NERSA – to implement from July.

“For the average household, this means significantly higher monthly electricity bills, placing further strain on struggling consumers,” says Duvenage. “These hikes far outstrip inflation and come at a time when the country is grappling with economic hardship.”

“NERSA should have been far more forceful in applying the brakes to Eskom’s price hikes over the past 15 years, but instead, they did not hold them to account for their runaway costs and controllable expenses, which gave rise to around 500% increases since 2008,” adds Duvenage. Doing so now to some extent is thus somewhat welcomed, but this doesn’t undo the damage that NERSA has allowed to take place for too long.

Did NERSA consider the AGSA report and ghost vending?

On the eve of the tariff decision, the Auditor-General South Africa (AGSA) warned that tariff increases alone will not improve Eskom’s financial viability unless they are accompanied by dramatic improvements in revenue management and controls. The AGSA also raised concerns about the unintended consequences of these hikes, including an increase in municipal debt and illegal connections due to affordability constraints.

The AGSA report identified serious governance failures at Eskom, including:

• Material misstatements in Eskom’s financial statements.
• Ghost vending and fraudulent prepaid electricity tokens generated at scale by Eskom employees with privileged access.
• Breakdown of controls in Eskom’s business processes.
• Distribution losses of 13.9 TWh in 2023/24 due to electricity theft.
• Massive bad debts, non-technical losses, and illegal connections.

Eskom itself has admitted that 1.8 million prepayment meters are vending electricity without payment. If each of these meters consumes 500 kWh per month at an average price of R2.50 per kWh, Eskom is losing approximately R27 billion per year.

“NERSA must explain whether it took these alarming findings into account when approving yet another price hike,” says Duvenage. “Why should South Africans keep paying more when billions are being lost to fraud, theft, and the management of Eskom, who have known what was happening with these ghost vending losses for years, did nothing to halt the practice until recently?”

Eskom must cut costs instead of raising prices

OUTA maintains that Eskom and NERSA should be focusing on real solutions to reduce the cost of electricity, rather than continuously increasing tariffs to compensate for inefficiencies. Eskom’s financial woes are driven by:

• Excessive primary energy costs: Poor procurement practices and outdated infrastructure continue to drive up the cost of coal and diesel.
• Overstaffing and inefficiencies: Despite Eskom being overstaffed compared to international benchmarks, effective workforce optimisation has not been implemented.
• Municipal debt crisis: Unpaid municipal debt is expected to reach R110 billion in 2025, yet Eskom continues to plan to recover losses through tariff increases instead of enforcing accountability. OUTA welcomes NERSA’s decision to cut the cost of arrear debt out of the price increase, and calls on Eskom and national government to find solutions to this crucial problem.
• Corruption and mismanagement: Infrastructure theft, procurement irregularities, and excessive operational costs persist, further escalating electricity costs. This includes the massive losses due to ghost vending of prepaid electricity, carried out with the complicity of Eskom staff.

OUTA calls for meaningful reforms

“The government should be holding municipalities accountable for their unpaid debts instead of making law-abiding citizens and businesses foot the bill,” says Duvenage. “NERSA’s job is to regulate in the interest of the public, yet year after year, they continue to approve price hikes without addressing the underlying issues of Eskom’s financial mismanagement.”

South Africans cannot be expected to pay indefinitely for Eskom’s failures. OUTA urges NERSA and Eskom to shift their focus towards structural reforms, improved efficiencies, and cost reductions to ensure that electricity is affordable for all.

The AGSA’s comments to the Portfolio Committee on Electricity and Energy this week bear repeating: “The audit outcomes showed that there is very little progress in implementing recommendations made by auditors over the years – to address the underlying root causes. The board has a responsibility to build an entity that is characterised by a culture of performance, accountability, transparency and institutional integrity, which will ultimately result in a sustainable delivery against the mandate.”