JOHANNESBURG, Gauteng — The National Energy Regulator of South Africa (NERSA) has closed public consultations regarding the upcoming Eskom electricity tariff hike, confirming an average increase of 8.83% scheduled to take effect on April 1, 2027. While the overall revenue requirement has been legally settled, regulators and energy advocates warn that the most severe impact for consumers may lie in soaring fixed charges and the urgent need to reform free basic electricity allocations.
Willibrod Majola, NERSA’s full-time regulator member for electricity, clarified that the R419 billion revenue requirement for Eskom’s next financial year has already been determined through a multi-year price determination process. This figure is based on an estimated national consumption of 163,950 gigawatt-hours, which translates to a blended average of 260 cents per kilowatt-hour across all customer categories nationwide.
According to Majola, the current regulatory phase focuses on segmenting this blended average into specific tariffs for distinct customer categories, including municipalities, large industrial users like mining houses and smelters, and residential households divided by consumption levels.
“The total must all add up to the R419 billion,” Majola explained, emphasizing that NERSA cannot approve a figure above this mandated cap. However, he noted a current discrepancy in Eskom’s submission: when reconciling the proposed tariffs for all municipalities and their respective customer categories, the total amounts to approximately 2% more than the R419 billion baseline. NERSA is actively investigating whether the grounds for this 2% variance are legally acceptable.
Majola outlined that Eskom’s revenue justification rests on two legal pillars: prudent operational costs and a return on the asset base. Prudent costs include essential expenditures such as coal procurement, machinery depreciation, and manpower. The return on assets is necessary to ensure Eskom can continue raising debt and equity in capital markets to fund transmission and infrastructure expansion.
Despite the regulatory framework, civil society organizations argue that the structural design of the tariff increase places an unsustainable burden on everyday citizens. Alia Kajee, senior campaigner at 350.org, stated that the campaign is fundamentally focused on how these proposed tariff increases impact households against the backdrop of a failing free basic electricity policy.
A central demand of the campaign is to raise the free basic electricity allocation from the current 50 units to 350 units per month. Kajee cited research from the Public Affairs Research Institute indicating that 350 kilowatt-hours is the basic minimum required to meet modern developmental goals, calling the current 50-unit allocation “grossly outdated.”
Kajee highlighted a stark implementation gap, noting that out of 2.8 million indigent households classified as eligible for free basic services, only 1.7 million actually receive them. “We are looking at how to increase access so households can meet their basic needs, rather than letting the current envelope remain static while people fall further behind,” she said.
Compounding the issue are the fixed charges embedded in the new tariff structure. Campaigners warn that a typical prepaid household customer could face fixed charges of approximately R670 per month before consuming a single unit of electricity, representing a 23% jump in fixed fees.
Kajee argued that this tariff breakdown disproportionately penalizes lower-income households, who often purchase electricity in small, daily increments (such as R20 at a time) to manage cash flow for food, transport, and childcare. In contrast, energy-intensive users, including large-scale mines and smelters, benefit from arrangements that allow them to pay less per unit than residential consumers.
Adding to the controversy, Kajee pointed out that the tariff increase jumped from an initial 6.19% to 8.83% partly due to a R54.7 billion calculation error attributed to the regulator itself, raising serious questions about accountability and who ultimately bears the financial brunt of administrative shortcomings.
Looking beyond immediate tariff structures, 350.org is calling for a systemic shift toward publicly funded renewable energy. Kajee emphasized that the true cost of Eskom’s current model must account for the full environmental and health impacts of coal dependency, including air pollution and the disproportionate health burden placed on communities in Mpumalanga.
“As we evaluate these tariffs, we must account for the physical and economic burden of coal and aggressively invest in cheaper, faster alternatives like solar power,” Kajee concluded, urging decision-makers to design an energy system that genuinely works for all South Africans.
